Japanese Stocks Fluctuate as Prime Minister Kishida Steps Aside

(Bloomberg) -- Japanese stocks fluctuated as hopes for lower US interest rates were balanced with concerns over political uncertainty over Prime Minister Fumio Kishida’s decision not to run for a second term.

The Nikkei 225 Stock Average fell 0.2% as of 11:30 a.m. in Tokyo, erasing an earlier gain of as much as 1.3%, as the Topix rose 0.5%. Japan’s currency strengthened 0.4% to 146.28 per dollar, while the 10-year yield on Japanese government bonds fell 1.5 basis points to 0.83%.

“Since public approval rating for Kishida’s cabinet had been at a low level, there may be expectations that the change at the top will increase confidence and improve the ability to carry out policies,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan. But “uncertainty over possible policy changes may weigh on the market in the short term.”

The Topix reached a 50% Fibonacci retracement of its 24% plunge from its July peak to Aug. 5 trough, encouraging some profit taking, said Seiichi Suzuki, chief equity market analyst at Tokai Tokyo Intelligence Laboratory.