Global Markets Rise as Yen Dips Amid Political Uncertainty in Japan
Global stock markets experienced a positive trend on Monday, with the Japanese yen weakening amidst political uncertainty following the ruling party's loss of its majority in the lower house of Parliament during the weekend elections.
European markets opened higher, with France's CAC 40 gaining 0.7%, Germany's DAX rising 0.5%, and Britain's FTSE 100 adding nearly 0.2%. U.S. futures also indicated an upward trajectory, with Dow futures up 0.4% and S&P 500 futures gaining 0.5%.
The weakening yen provided a boost to Japan's major exporters, with Toyota Motor Corp.'s stock surging 4.1% in Tokyo trading. Other notable gainers included Nintendo Co. (2.0%) and Sony Corp. (nearly 2.0%).
Despite losing its majority, the Liberal Democratic Party remains the top party in Japan. However, several members failed to secure re-election due to a scandal involving unreported campaign funding. The ruling coalition, including junior partner Komeito, secured 215 seats, a significant drop from the previous 279.
With political uncertainty looming, the Bank of Japan is unlikely to take immediate action on interest rates. The central bank is scheduled to hold a monetary policy meeting later this week.
Analysts believe the ruling party's defeat was largely anticipated and factored into market expectations. Tokyo stocks rose, with the benchmark Nikkei 225 surging 1.8%. Other Asian markets also experienced gains, with Australia's S&P/ASX 200 up 0.1%, South Korea's Kospi edging up 1.1%, Hong Kong's Hang Seng adding less than 0.1%, and the Shanghai Composite rising 0.7%.
Company earnings reports continue to be a key focus for investors, with most results exceeding analysts' forecasts. The U.S. Federal Reserve recently raised its benchmark interest rate to its highest level in two decades to combat inflation.
A key report on U.S. consumer spending, the PCE, is expected later this week. Analysts anticipate it will show a decrease in the inflation rate to 2%. The central bank is expected to cut interest rates again at its November meeting.
In energy trading, benchmark U.S. crude fell $3.46 to $68.32 a barrel, while Brent crude, the international standard, declined $3.48 to $72.57 a barrel. Analysts attribute the decline in oil prices to Israel's recent attacks on Iran, which were less severe than anticipated and did not target oil facilities.