Yen to Test Lower Lows After Voters In Japan Erase LDP-led Ruling Coalition's Majority

Akira Ito
28 Oct, 2024
Tokyo

Stock market indexes in Tokyo closed higher after a day of volatile trading following a stinging defeat of the ruling coalition block. 

The Nikkei 225 stock average jumped 1.8%, the broader Topix index advanced 1.5%, and the yen weakened to 153.67 against the U.S. dollar. 

Japan heads for unprecedented political instability after the ruling coalition of the Liberal Democratic Party and Komeito lost their strong majority in the lower house of the parliament in Sunday's national election.

In the 465-member lower house of the parliament, a majority of 233 is needed to form the next government or pass any bill in the chamber.

The Liberal Democratic Party reduced its seat in the house to 179 from 247, and Komeito weakened its count to 24 from 32. 

The Constitutional Democratic Party increased its lawmakers counts to 148, a sharp jump from 98; the Japan Innovation Party increased its tally to 48; and the Democratic Party for the People added seats to total 28 from 7. 

For nearly seven decades, the Liberal Democratic Party has governed Japan, except between 2009 and 2012 and between 1993 and 1994. 

The LDP was under pressure after the widespread slush fund scandal put the party in harsh light with voters.

Voters lacked enthusiasm and directed their anger at the established political order following the rising prices over the three years and stagnant wages for more than two decades. 

The political upheaval is likely to add another layer of complexity as the Bank of Japan prepares to wean off Japan's economy from two decades of low interest rates. 

The Bank of Japan is expected to leave its monetary policy and interest rates unchanged at the end of its policy meeting on Thursday, but the latest political outcome is likely to complicate the central bank's monetary policy plans. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average closed up 1.8% to 38,605.53, and the broader Topix index edged higher 1.5% to 2,657.78. 

In Monday's trading, tech stocks, banks, and industrial stocks traded volatile. 

Advantest Corp. gained 4.6% to ¥8,181.0, Tokyo Electron advanced 2.8% to ¥23,860.0, Lasertec added 4.8% to ¥22,270.0, and Disco Corp. increased 5.3% to ¥39,670.0. 

Mitsubishi UFJ Financial added 0.9% to ¥1,562.0, Sumitomo Mitsui Financial increased 1.8% to ¥3,160.0, and Mizuho Financial gained 1% to ¥3,115.0. 

Toyota Motor Corp gained 4.2% to ¥2,707.0, Honda Motor advanced 4% to ¥1,582.0, and Nissan Motor increased 3.5% to ¥409.80. 

IHI Corp. decreased 1.1% to ¥7,680.0, Panasonic Holdings rose 1.3% to ¥1,244.50, and Fanuc Corp. added 3.1% to ¥4,016.0.