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Asian stocks traded mixed on Wednesday as Japan’s benchmark index picked up but quickly ran out of steam on news that the prime minister will not seek re-election as head of the ruling party.
Japan’s benchmark Nikkei 225 index was down 0.1% in morning trading at 36,192.93 points. Australia’s S&P/ASX 200 gained 0.5% to 7,869.40 points. South Korea’s Kospi gained 0.7% to 2,640.10 points. Hong Kong’s Hang Seng lost 0.3% to 17,127.65 points, while the Shanghai Composite lost 0.4% to 2,857.90 points.
Japan’s ruling Liberal Democratic Party controls a majority in the lower house of parliament, which elects the country’s leader. Public support for Prime Minister Fumio Kishida has been falling lately amid a scandal involving shady money as well as his general lack of popularity among voters, according to Japanese media polls.
“We must prove that the Liberal Democratic Party will change. This will be the first step to clearly demonstrate this,” Kishida said in announcing his decision.
There is speculation that the party may choose a younger politician as its next leader, with names such as Shinjiro Koizumi, son of former Prime Minister Junichiro Koizumi, being floated. The younger Koizumi is still in his 40s, marking a change from older prime ministers of the past.
Wall Street’s overnight gains also boosted investor optimism. Although Japanese stock prices rose at one point in the morning session, they sank due to profit-taking, although prices soon recovered.
Global markets remain cautious amid uncertainty about the U.S. economy. A wealth of economic data on Japan is due next week, including machine orders, trade statistics, inbound travel figures, unemployment and consumer prices. Analysts believe the Japanese economy remains on basically solid ground, thanks to the strong performance of some Japanese companies.
U.S. stocks rose to one of their best days of the year after the first of several highly anticipated reports on the economy this week came in better than expected.
The S&P 500 rose 1.7%, posting its third-best day of 2024 after the U.S. government reported that wholesale inflation slowed last month more than economists had expected. The Dow Jones Industrial Average rose 408 points, or 1%, and the Nasdaq Composite rose 2.3%.
Inflation in the United States, which has been a cause for concern for years, finally appears to be slowing, meaning the US Federal Reserve could ease high interest rates.
Treasury yields edged lower in the bond market following the inflation data as traders remain convinced that next month’s Fed meeting will bring the first interest rate cut since the COVID crash of 2020. The yield on the 10-year Treasury note fell to 3.84% from 3.91% at Monday’s close.
Investors are still awaiting an inflation update from the US government later in the day. A report showing how much American consumers are spending at retail stores is due out on Thursday.
The economy is still growing and many economists do not expect a recession, but a sharp slowdown in U.S. hiring last month raised questions about its strength.
Starbucks rose 24.5% after it persuaded Brian Niccol to leave his job as CEO of Chipotle Mexican Grill to take over the coffee chain. Chipotle, meanwhile, fell 7.5%. Niccol has been its CEO since 2018 and its chairman since 2020, and helped send its stock up more than 240% over the five years through Monday.
Overall, the S&P 500 rose 90.04 points to 5,434.43. The Dow Jones gained 408.63 points to 39,765.64, and the Nasdaq Composite gained 407 points to 17,187.61.
In the energy market, U.S. benchmark crude rose 50 cents to $78.85 a barrel. Brent crude, the international standard, gained 44 cents to $81.13 a barrel.
In the foreign exchange market, the US dollar fell slightly to 146.82 Japanese yen from 146.84 yen, while the euro was trading at 1.0994 dollars, virtually unchanged from 1.0995 dollars.
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Yuri Kageyama is on X: https://x.com/yurikageyama
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