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Tokyo: Stocks drop 1.5% after Japan PM secures re-election
[TOKYO] Tokyo stocks dropped 1.50 per cent at the open on Monday after Prime Minister Shinzo Abe comfortably won re-election in a snap poll he had billed as a referendum on his economic policies.
The Nikkei 225 index at the Tokyo Stock Exchange lost 260.09 points to 17,111.49 following sharp drops on Wall Street and the dollar's fall against the yen on weak US inflation data last week.
Abe's ruling coalition scored a major victory in Sunday's general election as widely expected.
"The elections are a net plus for the market, but really came as no surprise and thus are not likely to be a very large factor in today's trading," said Nomura Securities equity market strategist Junichi Wako.
"Analysts are essentially back to where they were before - hoping for a thorough fleshing out of Abe's plan to revitalise the economy," he told Dow Jones Newswires.
A survey by the Bank of Jpaan showed Monday that confidence among major Japanese manufacturers edged down in the three months to December.
"In the meantime, overseas stock, currency, and commodity markets will set the tone for Japanese equities," Wako said.
The Dow Jones Industrial Average tumbled 1.79 per cent on Friday as US stocks took cues from a rout in European equities following another big drop in oil prices.
US oil prices fell to a fresh five-year low of US$57.81 a barrel after the International Energy Agency cut its oil-demand forecast for 2015.
Lower oil prices benefit consumers, but traders have been unnerved by the speed of the free-fall in crude prices, which could put projects on hold in the oil sector and hurt energy companies and banks.
The dollar was lower following weak US inflation data on Friday and risk aversion, buying 118.23 yen early Monday against 118.79 yen in New York Friday afternoon.
The euro fell to 147.30 yen from 148.05 yen and to US$1.2459 from $1.2464 in US trade.