Japanese Prime Minister Yoshihide Suga confirmed on Friday his intention to not to run in the ruling Liberal Democratic Party’s leadership race, allowing room for his replacement after just one year in office.
The story caused the Nikkei, a stock market index for the Tokyo Stock Exchange, to surge by 2%.
“He has been an unpopular leader and the country has struggled with the Covid vaccine rollout, leading to low levels of confidence among people in Japan,” said Yoshihide Suga.
“The market’s reaction to his announcement would suggest investors are optimistic that the country will find a stronger leader. Mining, healthcare, real estate and technology stocks all pushed forward on the main Japanese index.
Today’s jump has put the Nikkei back on a stronger path, with the index up nearly 7% since the beginning of the year. However, it remains well behind the US Nasdaq’s 21% during the same period of time, although it is a stronger performance than China’s SSE index.
Later today investors will have their eyes the US non-farm payroll data in the US which is expected to show employers hired 725,000 people in August.
“There is a fine line to walk for the result in terms of the potential market reaction. Significantly beating the figure could trouble investors as it would strengthen the argument for the Federal Reserve to start tapering its bond buying, thereby going down the path to withdraw support following the pandemic,” said Mould.
“But missing that forecast number could also trouble investors as it would suggest a slowdown in economic growth, which is something that’s been troubling other parts of the world including China.”
