Asian Market Update – Monday: Tokyo Gains after Election Landslide, Minor Losses in China, S. Korea

Tokyo streets

The Big Question: Will a new term help Abe to revive the world’s third-largest economy?

Asian stocks were trading in a mixed mode Monday morning, with nice gains seen in Tokyo after Prime Minister Shinzo Abe’s ruling party got a two-third majority in the election and slight losses in Greater China and South Korea.

In Japan, the Nikkei 225 surged 0.93 percent to about 21,658 right before midday, after opening at around 21,709.

Investors were responding to Sunday’s election results, which gave Abe’s party 312 out of 465 seats in the parliament, effectively securing Abe another term. The solid win for Abe suggested continued fiscal and monetary easing under under his economic policy program dubbed as Abenomics.

Before Sunday’s election, the Nikkei closed higher for a 14th straight day on Friday. Monday’s gain was also supported by a weaker JPY against the USD.

In China, the Shanghai Composite Index was down 0.02 percent to about 3,377 before midday. In Hong Kong, the Hang Seng Index lost 0.66 percent to around 28,298, after opening the session at 28,557.

Fresh data out China on Monday showed that the growth in home prices is cooling, following a barrage of measures from mainly local governments to contain the overheated housing market. Average home prices rose 6.3 percent year-on-year in September, slowing from 8.3 percent in August.

In South Korea, the Kospi was down a slight 0.05 percent to around 2,488 shortly before midday.

Down Under, the ASX 200 gained a minor 0.01 percent to around 5,907, remaining relatively flat from 5,908 at the same time on Friday.

Market focus this week:

In the US, markets are closely watching President Donald Trump’s pick for the Fed chair position. News reports cited Trump as saying over the weekend that Stanford University professor John Taylor and Fed governor Jerome Powell are among the candidates under consideration and a decision is coming shortly.

Main Market Movers – Mid-day Asian Trading Session

Indexes Value at Midday Daily Change
Japan- Nikkei 225 21,658 0.93%
China-Shanghai Composite Index 3,377 -0.02%
South Korea-KOSPI 2,488 -0.05%
Hong Kong –Hang Seng 28,298 -0.66%
Australia-ASX 200 5,907 0.01%

Cryptocurrencies

Prices of main cryptocurrencies were pointing lower on Monday during the Asian trading session.

At midday in Asia, bitcoin was down 0.18 percent to $5,958. Bitcoin is now down about $200 from the high of $6,156 reached on Saturday following a strong two-day winning strike on Friday and Saturday.

The price of ethereum lost a slight 0.68 percent to about $292 before midday. Ethereum dropped below the $300 level on Sunday.

Litecoin fell 2.11 percent to about $55.30 at midday. The virtual currency has been trading steadily around the $60 mark since Wednesday. Litecoin is currently in its third day of a losing strike, dropping from $61 on Friday.

Currencies

The Japanese yen lost 0.22 percent the US dollar at midday Monday to 113.76 per dollar.

The Chinese yuan lost 0.19 percent against the US dollar at 6.6311 per dollar.

The Australian dollar also lost 0.13 percent on the dollar, changing hands at 1.2779 per dollar at midday.

Commodities

WTI Oil was up 0.08 percent to $52.07 per barrel.

Brent Crude lost 0.02 percent to $57.86 per barrel.

Gold was down 0.34 percent to $1,276.03 an ounce.

Business News across Asia

In China, focus remains on the ongoing 19th National Congress of the Communist Party, which is expected to produce a new lineup of leadership for the powerful politburo.

Take Away: Markets would be paying attention to the new leadership to search for clues on economic and monetary policies. However, don’t expect anything else than continuation of the current path forward.

In Japan, the government announced that Prime Minister Shinzo Abe, who just emerged from a big win on Sunday’s election, spoke to US President Donald Trump over the phone. The two, once again, agreed to increase pressure on North Korea over the nuclear issue.

Take Away: Tensions on the Korea Peninsula remain high and fragile, with new missile tests from the North expected at any moment now. However, markets are getting used to these provocations so we need more than just the usual missile launch to create panic.

Featured image from Grips.ac.jp

Author:
Fredrik Vold is an entrepreneur, financial writer, and technical analysis enthusiast. He has been working and traveling in Asia for several years, and is currently based out of Beijing, China. He closely follows stocks, forex and cryptocurrencies, and is always looking for the next great alternative investment opportunity.