HONG KONG (MarketWatch) — Politics worked to split stock performance in Asia on Thursday, with Tokyo shares getting a lift from expectations for new elections and stepped up calls for more aggressive easing by Japan’s central bank, while China’s leadership change did little to boost shares.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.34% gained 1.9% to end at a one-week high, the sole gainer among the region’s leading stock indexes.
The Asia Dow was down 0.8%.
South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.18% fell 1.2%, Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -1.60% retreated 0.9% and Taiwan’s Taiex was down 0.2%.
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Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.27% dropped 1.6%, while the Shanghai Composite Index /zigman2/quotes/206600939/delayed CN:000001 -1.25% lost 1.2%, showing little reaction after China unveiled the makeup of its top Communist Party leadership body Thursday.
The losses outside of Japan followed a sharp drop Wednesday on Wall Street, as renewed tension in the Mideast and worries about the U.S. “fiscal cliff” of potential tax hikes and spending cuts kept investors on edge.
U.S. President Barack Obama reiterated in a news conference Wednesday that taxes on the wealthy must go up. Obama is set to meet with congressional leaders on Friday to discuss the country’s fiscal situation. See: MarketWatch’s full coverage of the fiscal cliff.
The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.1228% rose firmly above 80 yen (about $1) overnight — and had climbed to ¥80.81 by Thursday afternoon — amid speculation that the country is close to an election that could propel opposition leader Shinzo Abe, a monetary dove, to become the next prime minister.
Likewise, the euro /zigman2/quotes/210561215/realtime/sampled EURJPY -0.2240% rose above the ¥102 level overnight, and then breached the ¥103 level during Asian trade. Read: Dollar reverses loss after Obama speaks.
Obama discusses fiscal cliff
At a news conference Wednesday, President Obama speaks about the approaching fiscal cliff and reiterates the need for bipartisan cooperation.
“The dollar/yen remains better bid amid expectations that parliament will be dissolved tomorrow for snap elections on Dec. 16,” said Sue Trinh, a strategist at RBC Capital Markets.
The Japanese opposition’s Abe on Thursday urged the Bank of Japan to pursue aggressive monetary reflation. He called for the central bank to adopt an inflation target in the 2%-3% range, urging unlimited liquidity provisions in order to meet the CPI target.
Abe also said he would push to amend the law so that the policy board of the Bank of Japan would be obligated to meet official inflation targets.
Credit Suisse said Abe was seeking to garner support from small business for a snap election.
The research house also cast doubt that plans to ramp up money printing operations would help the economy, warning that “inflation amid devaluation of the yen is likely to dampen real private consumption and hence to widen the negative output gap.”
In Tokyo, consumer electronics giant Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -2.81% /zigman2/quotes/208567357/composite SNE -3.05% tumbled 8.9% after the global conglomerate announced after Wednesday’s close that it plans to issue the equivalent of about $1.85 billion in convertible bonds.
Among other tech names, NEC Corp. /zigman2/quotes/205173342/delayed JP:6701 -3.14% /zigman2/quotes/203814274/delayed NIPNF 0.00% rose 3.7%, and Nintendo Co. /zigman2/quotes/206371241/delayed NTDOF -3.42% climbed 1.7%.