Latest news with #marketDecline
Yahoo
5 days ago
- Business
- Yahoo
Japan's $6.8 Trillion Stock Market Faces Reckoning in Elections
(Bloomberg) -- Japanese stocks are at risk of a prolonged decline after the upper house vote this Sunday, if pre-election polls are anything to go by. The Dutch Intersection Is Coming to Save Your Life Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests LA Homelessness Drops for Second Year Manhattan, Chicago Murder Rates Drop in 2025, Officials Say Multiple local polls are indicating that the ruling coalition may lose its majority in the election this weekend, in another setback for Prime Minister Shigeru Ishiba after his surprise loss of majority in the lower house last October. Political concerns are already weighing on the market, with local equities underperforming the MSCI World Index this month. When the ruling parties lose a majority, 'the market needs 35 to 75 days to hit a trough, with the total loss during this period reaching about 8% on average,' said Toshiya Matsunami, chief analyst at Nissay Asset Management. That compares to the Topix index bottoming out in about 15 days if they win, he said. While Ishiba's Liberal Democratic Party-led coalition will likely remain the largest bloc in the upper house, a possible loss of majority is fueling concerns over the government's ability to close a trade deal before the Aug. 1 deadline and its weakened grip on its finances. Opposition parties have largely campaigned on much more expensive plans to lower the sales tax. That's rattled the country's bond market. The 10-year Japanese Government Bond yield hit a 17-year high on Tuesday. The yen is among the worst performing major currencies so far this month amid political shocks and trade flare-ups. The Topix index has dropped 1.2% in July after three months of gains. A potentially weaker minority government may further complicate trade negotiations with the US and rock investor sentiment in the market. President Donald Trump lifted tariffs on Japan to 25%, from 24% originally set in early April. The levy don't apply to sectoral tariffs — 25% on cars and car parts and 50% on steel and aluminum. The car levies are already hitting Japan's exports and increasing the risk of a technical recession. Some analysts said the election may also have ramifications on the country's corporate governance reform, which has been one of the driving forces of Japan's stock market rallies in recent years. 'There is a possibility that the stance on corporate governance may change, depending on who the LDP will form a coalition with,' said Tomochika Kitaoka, chief equity strategist at Nomura Securities. 'Investors don't seem to be paying attention to that,' he added. Growing voter discontent with the establishment, which had appeared largely absent in Japan until now, has helped relative newcomers like Sanseito gain traction in the polls. The right-wing party is pushing for 'a change to an economy where too much profits flow to shareholders.' 'As the economy shifts to inflation from deflation, people who are scraping a living are complaining and we are seeing a rise of populism the West has experienced,' said Shinichi Ichikawa, senior fellow at Pictet Asset Management Japan. 'Japan wasn't an exception after all. There's no doubt that income redistribution will become a key theme from now.' To be clear, the impact of the vote on the country's $6.8 trillion stock market will likely be nuanced. Exporters, which have taken the brunt of US tariffs, may benefit from a weaker yen, while consumer stocks may gain from opposition parties' agenda to cut sales tax on food. But 'if far-right and far-left parties grow, there will be a risk of a triple fall' in yen, bonds and stocks, said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank. How Starbucks' CEO Plans to Tame the Rush-Hour Free-for-All Forget DOGE. Musk Is Suddenly All In on AI How Hims Became the King of Knockoff Weight-Loss Drugs The Quest for a Hangover-Free Buzz Thailand's Changing Cannabis Rules Leave Farmers in a Tough Spot ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
6 days ago
- Business
- Bloomberg
Japan's $6.8 Trillion Stock Market Faces Reckoning in Elections
Japanese stocks are at risk of a prolonged decline after the upper house vote this Sunday, if pre-election polls are anything to go by. Multiple local polls are indicating that the ruling coalition may lose its majority in the election this weekend, in another setback for Prime Minister Shigeru Ishiba after his surprise loss of majority in the lower house last October. Political concerns are already weighing on the market, with local equities underperforming the MSCI World Index this month.
