Japan Indexes Erase Gains of Previous Session, Diet Elects Ishiba as Next Prime Minister

Akira Ito
02 Oct, 2024
Tokyo

Stock market indexes in Tokyo erased most of the gains of the previous session, and investors turned cautious amid rising tensions in the Middle East. 

The Nikkei 225 stock average dropped nearly 2%, and the broader Topix index declined more than 1% amid worries of a wider war in the Middle East. 

Iran launched a ballistic missile attack targeting Israel, escalating war in the Middle East, and Israeli forces carried out a ground invasion in Lebanon to dismantle installations controlled by Hezbollah. 

Despite Israel's recent military advances against Hezbollah in Lebanon and Hamas in Gaza, security conditions are not likely to improve in the Middle East in the near future. 

Investors in Tokyo and Asia are worried about the possibilities of crude oil supply disruptions if the war draws Iran and its supporters to a wider war, prolonging instability in the region. 

The yen decreased 0.1% to 143.64 against the U.S. dollar as currency traders monitored developments in the Middle East. 

Japan's parliament elected Shigeru Ishiba, the president of the Liberal Democratic Party, as the 102nd prime minister, and investors looked for clues about the future course of the monetary and fiscal policies. 

Prime Minister Ishiba is expected to support a gradual increase in the interest rate and is likely to be more conservative in increasing government spending. 

The newly elected prime minister announced dissolution of the parliament on October 9 and called for a general election on October 27, as the ruling party sought to regain public trust following the political funds scandal.  

On Tuesday, the Bank of Japan's Tankan survey found optimism among large manufacturing companies, but the mid-sized and smaller companies in the construction and service sectors expect conditions to worsen in the months ahead. 

 

Japan Stock Movers 

The Nikkei 225 stock average declined 1.9% to 37,930.58, and the Topix index dropped 1.1% to 2,660.87. 

Tech stocks were among the leading decliners in Tokyo as investors turned cautions amid rising tensions in the Middle East. 

Tokyo Electron decreased 3.6% to ¥25,105.0, Advantest fell 4% to ¥6,616.0, and Lasertec Corporation dropped 4% to ¥22,970.0. 

Seven & I decreased 0.1% to ¥2,161.0, Isetan Mitsukoshi dropped 4.4% to ¥2,242.0, Fast Retailing declined 3.7% to ¥46,950.0, and Takashimaya fell 0.7% to ¥1,154.50.  

Marubeni Corp. gained 1.5% to ¥2,417.50, Itochu advanced 1% to ¥7,868.0, Mitsubishi Corp added 0.6% to ¥3,046.0, and Mitsui & Company gained 1.2% to ¥3,332.0. 

Shipping companies were in focus for the second day in a row after workers at 14 key ports in the U.S. went on a strike following the breakdown of wage negotiations. 

Nippon Yusen KK decreased 0.4% to ¥5,312.0, Kawasaki Kisen Kaisha  fell 0.6% to ¥2,216.0, and Mitsui O.S.K. Lines gained 1.2% to ¥5,046.0. 

Automobile companies were in focus ahead of monthly sales data, and the vehicle makers scrambled to stock additional inventories after the U.S. port workers strike disrupted supply chains. 

Toyota Motor decreased 0.9% to ¥2,573.50, Honda Motor increased 0.2% to ¥1,544.50, and Nissan Motor jumped 0.2% to ¥410.70.