Nikkei Rises with Election and Tax Delay News

Japan’s Nikkei bounded on Tuesday as investors anticipated the announcement of a snap election and a delay to the planned sales tax rise.

The Nikkei 225 closed up 2.2% at 17,344.06, after having suffered its biggest one-day drop since August on Monday.

After the markets closed, Japan’s Prime Minister Shinzo Abe called an early election, two years ahead of schedule.

At a news briefing, he said he would dissolve parliament later this week.

He also said he was delaying a planned but unpopular increase in the country’s sales tax.

In April this year, the sales tax was increased for the first time in 17 years, from 5% to 8%, but the move has dented consumer confidence and has had a negative impact on the economy.

Private consumption accounts for some 60% of Japan’s economy.

The yen traded at 116.51 yen to the dollar after hitting a seven-year low of 117.06 on Monday.

Elsewhere in Asia, shares in Hong Kong’s Hang Seng index closed down 1.1% at 23,529.17 points after data showed that average new home prices in China’s 70 major cities fell 2.6% in October from a year earlier.

On the mainland, the Shanghai Composite was closed down 0.71% at 2,456.37 points.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza