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Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 23 October 2017 at 7:00 GMT

Morning Markets: Abe win drives Japanese shares higher

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • EU: Flash Consumer Confidence (1400 GMT)
  • CA: Monthly Wholesale Sales: (1230 GMT)

Japanese prime minister Shinzo Abe won an easy electoral victory this weekend, with his Liberal Democratic party coalition now in possession of a parliamentary supermajority that expands his mandate for constitutional reform and his Abenomics programme designed to jolt the Japanese economy out of its prolonged stagnation.

Abe’s victory was met Monday by a Nikkei rally that took the index up 1.11% while the yen headed lower with USDJP rising to the 1.1375 area. According to CNBC, however, only half of Japanese voters were willing to endorse Abe’s performance to date in a recent poll, meaning that while the PM may have come out well ahead of a hapless opposition, approval ratings are likely to be an issue as Abe pushes ahead with planned changes. 

Elsewhere in Asia, Hong Kong shares fell by 0.64% as financials headed lower while Australian stocks fell by 0.22% on the back of industrial and real estate declines as well as a stronger AUD.

Oil prices remain supported by clashes between Iraqi and Kurdish forces with the former having now taken the oil-producing Kirkuk province and pushing ahead to the capital or Erbil. In Europe, the Catalan regional parliament is set to agree on a response to Madrid’s imposition of direct rule in the breakaway province, a move that Catalan leader Carles Puigdemont has called “the worst attack on insititutions since Franco”.

On the data calendar, today sees the EU flash consumer confidence indicator out at 1400 GMT.

Market signals

Asian session

  • Japanese Prime Minister Shinzo Abe won victory in lower house elections on Sunday
  • Abe's ruling coalition is expected to retain its two-thirds majority in parliament
  • The Nikkei surged and was up 1.11% at its close
  • Other Asian markets were mixed; the ASX 200 closed down 0.22% to 5,894
  • China's new-home prices rose 6.3% in September against the same month last year
  • The result represents a deceleration from the 8.3% year-on-year expansion in August
  • ANZ Bank reached a settlement with the securities regulator over rate-rigging allegations 
  • Markets in New Zealand and Thailand are closed for a public holiday

Forex ahead

  • The yen was at three-month lows after Shinzo Abe's election win
  • The euro eased as Spain’s constitutional crisis fueled concerns about political unity 
  • Sterling is on the rise with the 1.32 level in focus for cable
  • AUDJPY rose by 0.65% in the wake of Abe's commanding electoral victory

From the Floor

QT soon?The ECB is the highlight of the week, we’ll be looking for news of a taper schedule,” says Hardy

Victory in Japan.Foreign investors will increase their exposure to Japanese equities after Abe’s win,” says Garnry 

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Ore rise
Australia's mining shares were higher after spot iron ore prices rose 2.6% on Friday, says Saxo Capital Markets (Australia). And sentiment continues to remain positive.

Abe it is
Shinzo Abe was easily re-elected as Japanese Prime Minister and the market responded overwhelmingly positively, says Saxo's Singapore team.

It's all bull
With the US jobs market at white-hot levels and global growth looking strong, this is a bull market by any name, says Kay Van-Petersen.

hgg

 The Nikkei rose and the yen fell following Shinzo Abe's 
resounding election win. Photo: Shutterstock

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