Aussie Rises as Weak Yen Drives Gains in Japanese Stocks – Asia Market Wrap

Asian markets got off to a slow start in the fourth quarter, but a weaker Yen benefited Japanese stocks.

The Nikkei 225 market surged around 2%, a day after falling over 5% following the ruling party’s leadership election. A barometer of Asian shares was barely changed after rising in early trading. Taiwanese stocks rose while those in Australia fell. China and Hong Kong are closed for the holidays. Futures for European shares continued higher during Asian trading hours.

The Yen fell against the Dollar on Tuesday as Fed Chair Jerome Powell stated that the central bank will lower interest rates over time, while reiterating that the overall economy remained strong. Shigeru Ishiba is poised to be confirmed as Japan’s new prime minister on Tuesday, following a leadership contest that caught investors off guard expecting more monetary stimulus from his competitor.

Markets were also braced for the effect of news that Israel has launched targeted ground raids in Lebanon. Oil prices rose marginally as investors assessed the chances of a larger conflict in the Middle East.

Retail sales in Australia increased more than predicted in August due to tax cuts and nicer weather, which encouraged households to spend more. The data showed that the Australian dollar beat its major peers. Australian iron ore miners’ shares dipped as the metal moved lower after reaching its highest level since early July on Monday. China’s markets are on a week-long holiday following the largest increase in 16 years on Monday. The MSCI China Index outperformed an emerging-market gauge that excludes Chinese shares by over 22 percentage points in September, the largest margin of outperformance since June 1999.