Japan’s Prime Minister Shinzo Abe has announced his resignation after eight years as leader due to ill-health, prompting concerns from investors about Japanese monetary programmes. Concerns about his health grew after he went to hospital twice in one week. Officials from the governing Liberal Democratic Party (LDP) tried to quash speculation that the Prime Minister may be unable to serve out the rest of his term, due to end in September 2021. Prior to the announcement, Japan’s stock market fell and the yen strengthened. Tokyo’s Topix index reversed gains of more than one percent to be down as much as 1.5 percent in afternoon trading on Friday.
The prospect of Mr Abe’s resignation has prompted concerns among investors that his signature monetary and fiscal policy programme, Abenomics, might end with his departure.
Nicholas Smith, Japan equity strategist at CLSA said: “This is probably not a good thing at all. We could have a full clear-out of people in charge.
“That could leave us with someone in charge who doesn’t have the grip Abe did and cannot hold things together to maintain the momentum on the issues the market sees as important.”
He added that the market would probably react badly to any return to “revolving door” Japanese politics — in the two decades before Mr Abe took power in late 2012, Prime Ministers changed at a rate of once every 17 months.
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5.00pm update: FTSE down at close
The FTSE-100 index at the close was down 36.42 at 5963.57.
4.50pm update: US stocks extend S&P 500’s rally
The S&P 500 rallied for the seventh straight session on Friday.
The tech sector’s 0.6 percent rise provided the biggest boost to the benchmark index.
Energy stocks advanced 0.8 percent as Hurricane Laura passed the heart of the US oil industry in Louisiana and Texas without causing any widespread damage to refineries.
“Technology has kind of become the recession play. With everybody piling in into it, the momentum is certainly on technology’s side,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“Equity markets are in kind of a risk on trade. It’s a recognition that the Fed is probably not going to be touching interest rates for quite some time.”
2.25pm update: Canada’s GDP surges
Canada’s GDP surged 6.5 percent in June.
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1.45pm update: FTSE slightly down
The FTSE-100 index at 1:45pm was down 4.41 at 5995.58.
12.30pm update: German yields rise to highest since June
German bond yields briefly rose to their highest since early June on Friday.
The Federal Reserve’s decision to target average inflation pushed yields to multi-month highs on both sides of the Atlantic.
10.45am update: FTSE jumps up
The FTSE-100 index at 10:45am was up 18.66 at 6018.65.
10.05am update: Barclays analysts comment
Barclays analysts wrote in a note: “As markets have turned decidedly more risk-on, correction fears are mounting.
“A pullback is, of course, possible, but we remain of the view that the unwind of the massive flight to safety seen year-to-date is likely closer to the beginning than the end.”
9.30am update: FTSE 100 stumbles
Early gains in London’s FTSE 100 fizzled out on Friday as traders headed into the long weekend.
Traders were concerned about a choppy post-pandemic economic rebound.
The blue-chip FTSE 100 was down 0.3 percent.
8.45am update: Japanese stocks fall with Prime Minister set to resign over health fears
Japanese stocks have fallen with the Prime Minister Shinzo Abe set to resign over health fears.
Japan’s stock market fell and the yen strengthened, with Tokyo’s Topix index reversed gains of more than one percent to be down as much as 1.5 percent in afternoon trading on Friday.
The prospect of Mr Abe’s resignation has prompted concerns among investors that his signature monetary and fiscal policy programme, Abenomics, might end after he leaves office.
6.44am update: Trump promises tariffs on companies that leave US to create jobs overseas
Mr Trump said on Thursday that if he was re-elected, his administration would impose tariffs on any company that leaves the United States to create jobs elsewhere.
“We will impose tariffs on any company that leaves America to produce jobs overseas,” Trump said in his acceptance speech at the Republican National Convention.
“We’ll make sure our companies and jobs stay in our country, as I’ve already been doing.
“Joe Biden’s agenda is Made in China. My agenda is Made in the USA.”