Japanese Stocks Slip as Investors Turn Cautious Before Election
Japanese stocks slid as investors turned cautious ahead of Sunday’s upper house election, with an increasing number of local reports indicating the ruling coalition is facing risk of a defeat.
Topix Index fell 0.4% to 2,815.10 as of 9:26 a.m. Tokyo time.
Nikkei declined 0.3% to 39,554.59 .
The ruling Liberal Democratic Party and its junior coalition partner will struggle to get a majority in the upcoming election, according to multiple polls conducted by local media. That has raised concern over higher spending, pushing Japan’s long-term government debt yield higher in recent days.
Japan Bond Rout Touches New Pain Point as 10-Year Yield Rises.
“If the opposition gains strength and the market begins to anticipate tax cuts or fiscal expansion, long-term interest rates may rise further — and in that case, stock prices will inevitably decline,” said Mitsushige Akino, president of Ichiyoshi Asset Management. “Investors are adopting a wait-and-see stance.”
The yen meanwhile weakened overnight, falling more than 1% against the dollar as US inflation data spurred traders to trim expectations for Federal Reserve rate-cuts.
Investors must closely monitor signs of “sell Japan” as the yen is being sold even amid rising domestic interest rates, said Akino.
Source : Bloomberg
