HONG KONG — Asian markets experienced significant fluctuations at the start of the week. The Nikkei 225 index in Tokyo plummeted nearly 5%, while Chinese markets surged in response to new economic stimulus measures aimed at reviving the struggling economy.
Following the ruling Liberal Democratic Party’s decision to appoint former Defense Minister Shigeru Ishiba as the new Prime Minister, Japanese shares faced a decline. Ishiba is set to succeed Prime Minister Fumio Kishida, who is expected to resign on Tuesday.
Ishiba has publicly supported the Bank of Japan’s interest rate hikes from their near-zero levels and has indicated a willingness to consider raising corporate taxes, a move seen as less favorable to the market compared to his challenger, Economic Security Minister Sanae Takaichi, whom he defeated in a closely watched run-off vote.
As of midday Monday, the Nikkei was down 4.7%, trading at 37,956.32. Additionally, the dollar slipped from over 146 yen to around 143 yen, trading at 142.49 yen by mid-Monday, up from 142.29.
Japanese exporters faced a setback as a stronger yen negatively impacts their overseas earnings. Notably, shares of major car manufacturers took a hit, with Toyota Motor Corp. down 3.5%, Honda Motor Co. falling by 4.1%, and Nissan Motor Co. declining 5.8%.
Ishiba has endorsed Kishida’s “new capitalism” policies, which aim to promote a more equitable distribution of national wealth. However, rising prices have hindered progress in encouraging consumer spending.
In contrast, Hong Kong’s Hang Seng index saw a significant increase of 3.3%, reaching 21,321.97, with the Hang Seng Mainland Properties Index up by 8.6%. The Shanghai Composite index rose 5.7% to 3,263.59, bolstered by impending measures to stimulate the property market, timed just before a week-long national holiday in China marking 75 years of communist rule.
China’s efforts to revitalize its property sector include directives from the central bank for banks to lower mortgage rates on existing home loans by the end of October and the lifting of home purchase restrictions in major cities like Guangzhou.
Despite these measures, China’s manufacturing activity continues to show signs of contraction, with the official purchasing managers’ index for September recorded at 49.8, remaining below the threshold indicating growth.
Elsewhere in Asia, Australia’s S&P/ASX 200 index gained 0.7% to 8,273.10, while South Korea’s Kospi fell by 0.9% to 2,627.13.
In the U.S. markets on Friday, the S&P 500 nudged down by 0.1% to 5,738.17, while the Dow Jones Industrial Average saw a rise of 0.3%, reaching 42,313.00, a new record. The Nasdaq composite slipped by 0.4% to 18,119.59.
In the bond market, Treasury yields eased following reports indicating a slower inflation rate in August than anticipated, reflecting a trend that could influence the Federal Reserve’s future rate decisions as it aims to control inflation and sustain economic growth.
On the commodities front, benchmark U.S. crude oil prices increased by 40 cents to $68.58 per barrel, while Brent crude prices rose by 45 cents to $71.99 per barrel.
The euro was recorded at $1.1158, a slight decrease from the previous rate of $1.1163.
