Japan Indexes Extend Gains Despite Rising Political Instability and Policy Uncertainty

Akira Ito
29 Oct, 2024
Tokyo

Stock market indexes in Tokyo closed higher following gains in overnight trading in New York. 

The Nikkei 225 stock average and the broader Topix advanced around 0.8%, driven by strong gains in tech and financial stocks. 

Japan's market indexes advanced for the second day in a row as investors continue to reassess the implications of the recent national election. 

The Liberal Democratic Party-led coalition lost its parliamentary majority, raising political instability and heightened policy uncertainty as leading parties struggle to form the next government. 

The Bank of Japan is widely expected to leave its benchmark rates unchanged on Thursday, but the central bank's plan to gradually increase its interest rates may face additional political headwinds. 

On the economic front, Japan's seasonally adjusted unemployment rate decreased to 2.4% in September from 2.5% in August and fell to the lowest level since January, the Ministry of Internal Affairs and Communications said on Tuesday. 

The number of employed persons was 68.14 million, an increase of 270,000 from a year ago, and increased for the 26th consecutive month.

The number of unemployed declined by 90,000 from a year ago to 1.73 million and decreased for the second month in a row.

The job-to-applications ratio was unchanged from the previous month at 1.24%, and the labor force participation rate edged slightly higher to 63.5%. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average increased 0.8% to 38,903.68, the broader Topix index gained 0.9% to 2,682.02, and the yen edged higher to 152.67 against the U.S. dollar. 

Banks traded higher ahead of the Bank of Japan's rate decisions on Thursday.

Mitsubishi UFJ Financial increased 3% to ¥1,609.0, Sumitomo Mitsui Financial gained 2.6% to ¥3,242.0, and Mizuho Financial advanced 2.6% to ¥3,242.0. 

Industrial companies also advanced in Tokyo trading following the weakness in the yen. 

IHI Corp. increased 5.4% to ¥8,095.0, Nitto Denko added 2.6% to ¥2,507.0, Furukawa Electric advanced 6.2% to ¥3,718.0, but Toto Ltd. declined 13% to ¥4,303.0. 

Tokuyama dropped 3.7% to ¥2,630.0 after the chemical company reported fiscal second quarter sales declined slightly but net profit advanced 51.8% from a year ago. 

The company reiterated its positive sales and earnings outlook in the current fiscal year.