Only China and Hong Kong bourses advanced in the Asia Pacific region. Japan, Australia, and South Korean markets fell over 1%. Europe’s Stoxx 600 is off 0.35% after falling 0.65% yesterday. US index futures are lower. The S&P 500 fell by nearly 0.2% Tuesday and has not regained consecutive loss dates since early September. The NASDAQ takes a four-day winning streak into the session but trades 0.6% lower in futures. Global bond sell-off continues. European benchmark yields 3-5 bp higher.
The 10-year US Treasury yield is pushing above 4.20%. Canada and Australia 10-year yields are skyrocketing 11 bp and 16 bp, respectively. Gold is steady, but still trading below the record high reached yesterday just below $2741. December WTI is moving higher, near a five-day high at $70.75. Last week the contract was unable to overcome the 200-day moving average tested on October 14 (~$74.35). Asia Pacific If Japan’s Liberal Democratic Party loses its lower house majority, what’s next?
Asia Pacific
If Japan’s Liberal Democratic Party does lose its lower house majority, what will happen? If with its coalition partner, Komeito, a majority is maintained, there may be little policy impact. After several years of LDP leadership efforts and aggressive Chinese actions in the region, have seen the public warm to the idea of the re-militarization of Japan. Komeito accepts the need for increased military spending but wants limits on the use of force. A poll by Asahi newspaper raised the possibility the together the governing coalition loses its majority. We suspect that rather than an opposition government, another party could be added to the coalition. The main opposition party, the Constitutional Democratic Party is polling slight less than 15%. Still, at this late stage, polls show 40% are undecided. Public support for the LDP waned due to rise in price pressures and the funding scandal. A dozen LDP member have been denied party support for their campaigns, but if they win, they ostensibly could rejoin the LDP, bolstering its numbers. Still, it seems that the worse the LDP performs, the harder it will be for the new prime minister (Ishiba), and perhaps, the larger the economic package, due next month.
