Nikkei 225, TOPIX, USD / JPY, US Non-Agricultural Payroll, SGX, Xi Jinping Call Points
- Japanese stocks will rise higher as Prime Minister Suga’s resignation dampens uncertainty
- USD / JPY struggled to keep performance anchored higher in the experiment USD
- Risky assets are perky in the face of US job data. Do US returns move markets?
Japanese Prime Minister Yoshihide Suga has resigned today, showing that he is not seeking re-election of the leadership under the ruling LPD. The shock came when the prime minister said that the energy needed to deal with the ongoing Covid-19 Delta outbreak would not allow him to make enough of a campaign.
Several commentators ask whether the electric brokers who appointed Mr Suga wanted to change leaders before facing the electorate. Speculation developed for a possible October election.
The Nikkei 225 the news was quickly picked up and Topix reached a 30-year high as markets felt a degree of certainty in appointing a new leader. It is also expected that those who take the reins will announce further incentives.
When equities outperformed positions, the initial rise in risk in the FX room did not continue, USD /JPY tried to run over 110.00 but in the end failed to do so. APAC stock indices were mostly green, with the exception of Chinese stock markets, which all moved lower.
President Xi Jinping announced the launch of a third stock exchange in Beijing to complement the two existing bases in Shanghai and Shenzhen. The new exchange will focus on providing financing to local SMEs through the issuance of shares, building on debt financing, which has been problematic. The announcement comes at a time when the Chinese Communist Party is dealing with many listed business sectors.
China’s huge real estate company Evergrande Group today suspended the suspension of local currency bonds due to its irregularities. The share price fell further and the default of their estimated USD 300 billion would affect the markets. Their US dollar-denominated bonds trade less than 30 cents against the dollar.
As of today, the Singapore Stock Exchange has promised to list special purpose vehicles (SPACs) on SGX. Investment vehicles have been well received in the US for some time, but are being reviewed by the SEC. As global central banks flood the markets with liquidity, SPACs allow money to be raised quickly compared to traditional methods.
Non-agricultural payroll calculations are ahead of us and will be closely monitored after some preliminary data on remote jobs at the beginning of the week.
USD / JPY, NIKKEI 225, USA 10 YEARS OLD
The Japanese yen initially weakened when Prime Minister Suga resigned, but the anti-risk reaction was limited to Japanese equities and short sales of the yen continued. The relationship between USD / JPY and US 10-year Treasury interest rates appears to be strong, and US job data later today may provide some impetus to exchange rate and currency pair movements.
– Written by Daniel McCarthy, Strategist at DailyFX.com
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