Nikkei jumps on Yen slide ahead of elections

Posted by ProTradingIndicators on

Politics was at the forefront of market movements on Thursday, dividing stock performance in Asia with Japanese shares getting an advance from expectations for possible new leaders to push for easing policies, while China’s leadership change did little to boost key Asian indices. China unveiled their new leaders on Thursday, led by Vice President Xi Jinping as the nation’s leader-in-waiting ahead of a formal handover early next year. Vice Premier Li Keqiang was named as the party’s No. 2, putting him on the path to take over as premier in March.

Japan’s Nikkei was up 1.4% at a one week peak, but South Korea’s Kospi fell by a similar 1.4%. Hong Kong’s Hang Seng Index declined marginally by 1%, while the Shanghai Composite Index lost about 0.6%, with negligible response to the declaration of China’s new Communist Party leaders. Asian losses except Japan followed a sharp spiral downwards from Wednesday’s decline on Wall Street, as political tension in the Middle East grew and the foreboding of U.S. “fiscal cliff” kept traders on their toes, with a likely risk-off mood to stay in the markets until bipartisan co-operation in the U.S senate gives investors some comfort with a near-term temporary resolution.

The Nikkei this week

The Nikkei average closed higher on Thursday as Japan’s main opposition leader’s comments to urge further monetary easing and to support public spending lifted exporters and contractors. Comments by Shinzo Abe, former prime minister and head of the Liberal Democratic Party (LDP), pushed the yen to a 6-1/2-month low against the dollar at 80.83, boosting shares of Japanese exporters. Toyota Motor Corp , Honda Motor Co, Canon Inc and TDK Corp were up average 4.8%. Contractors Kajima Corp, Taisei Corp and Obayashi Corp all rose more than 6 percent. A more than 9 percent plunge by Sony Corp was the worst drag on the Nikkei 225 as the electronics maker touched its lowest level in 30 years. The company, reeling from four consecutive annual losses announced it will sell convertible bonds.

The dollar was up firmly above 80 yen overnight Wednesday and climbed to ¥80.89 by Thursday afternoon in the midst of speculation that the country is close to an election that could push up opposition leader Shinzo Abe, known for his dovish stance, to become the next prime minister.

Stocks outside Japan

Asian stocks outside Japan slid toward a two-month low amid concern of impending fiscal cliff may post threat to already anemic global growth. BHP Billiton Ltd. (BHP), the world’s largest mining company, fell 1.8 percent, declining for a sixth session in its longest losing streak in 4 months. Tencent Holdings Ltd., China’s biggest Internet company, dropped almost 5 percent in Hong Kong after earnings missed estimates and the company warned that advertising revenue could continue to see slower growth.

Key Asian Economic data Ahead:

November 19: Bank of Japan announcement
November 20: Japan trade data
November 21: China Flash PMI manufacturing index—an important indicator on the health of the Chinese economy based on survey on manufacturing companies.

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