Asian Markets Rally as Japanese Stocks Lead Gains Following Prime Minister’s Resignation

Asian-Pacific markets opened the week mostly higher as investors reacted to the unexpected resignation of Japanese Prime Minister Shigeru Ishiba and awaited key economic data across the region.

Japanese Stocks Surge

As of 9:20 a.m. Vietnam time on September 8, Japan’s Nikkei 225 jumped 1.5%, while the Topix index rose 1% to a fresh record high. The rally came after Mr. Ishiba stepped down following mounting political pressure, particularly after his party’s defeat in last year’s general election.

According to Stefan Angrick, head of Japan economics at Moody’s Analytics, the frontrunners to succeed Ishiba include Koizumi Shinjiro – the current Agriculture Minister and son of former Prime Minister Junichiro Koizumi – and Takaichi Sanae, a close ally of the late Prime Minister Shinzo Abe who finished second in last year’s party leadership race.

Richard Kaye, portfolio manager at Comgest, described the market’s strong reaction as “somewhat surprising” but noted it reflects optimism surrounding the incoming leadership. He pointed out that Takaichi, who supports deregulation and is reluctant to raise interest rates, could be seen as a pro-growth candidate, fueling investor enthusiasm.

Yen Weakens, Bond Yields Rise

While equities rallied, the Japanese yen fell 0.64% to 148.33 per dollar. Government bonds continued to face selling pressure, with the 30-year yield climbing over 4 basis points to 3.272% and the 20-year yield advancing to 2.676%.

Analysts say persistent inflation, tighter monetary policy, and fiscal uncertainty are driving yields higher. BMI, a unit of Fitch Solutions, warned that Japan could face prolonged political uncertainty through the fourth quarter of 2025.

Mixed Performance Across Asia

South Korea: Kospi edged up 0.15%, while Kosdaq gained 0.47%.

Hong Kong: Hang Seng rose 0.48%.

Mainland China: CSI 300 traded flat.

Australia: S&P/ASX 200 slipped 0.38%.

Investors are also awaiting China’s August trade data, expected later this week.

Oil Prices Edge Higher

In commodities, oil prices ticked up after OPEC+ announced it would continue raising output from October, albeit at a slower pace. Brent crude added 0.53% to $62.20 per barrel, while U.S. West Texas Intermediate (WTI) rose 0.6% to $65.89 per barrel.

Wall Street Prepares for Inflation Data

In the U.S., attention is turning to two closely watched inflation reports this week. The Producer Price Index (PPI) for August is due on September 10, followed by the Consumer Price Index (CPI) on September 11.

Last Friday, Wall Street ended lower after a weaker-than-expected jobs report raised concerns about slowing economic momentum, despite strengthening expectations of a Federal Reserve rate cut:

S&P 500 lost 0.32% to close at 6,481.50.

Nasdaq Composite inched down 0.03% to 21,700.39.

Dow Jones Industrial Average fell 220 points, or 0.48%, to 45,400.86.