Tokyo Market Steadies After Politics-Related Plunge
Japanese stocks recovered slightly early today after Monday’s major drop, as the nation’s political upheaval dominated market activity.
The Nikkei stock index was up 176.79 points to 19,389.22 in late morning, helped by “short covering” by traders who had correctly bet on a market slide.
On Monday, the Nikkei dove 592.11 points, or 3%, to 19,212.43, as investors reacted to Prime Minister Kiichi Miyazawa’s loss of a no-confidence vote in Parliament on Friday. He was forced to call for new elections.
Many analysts predict the Liberal Democratic Party, which has ruled Japan since 1955, will lose its lower-house majority as members desert the party because of its failure to deliver promised anti-corruption measures.
Analyst Shigeru Masuda of Yamatane Securities said the stock market took a tumble purely because of the uncertainty over who will end up running the country.
“We are in new territory here,” said George Nimmo of SBCI Securities.
But analysts also noted that the weakened yen--another byproduct of the crisis--could help stocks by improving the export outlook. Early today the dollar was trading at 111.30 yen.
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