Japan’s Nikkei Stock Average Ends Lower amid Election Jitters (Update 1)

Reuters

12:16 JST, October 22, 2024 (updated at 16:30 JST)

TOKYO (Reuters) – Japan’s Nikkei share average closed lower on Tuesday amid concerns the ruling party may lose its lower house majority in the coming election, while Wall Street’s weak finish overnight also weighed on market sentiment.

The Nikkei fell 1.39% to 38,411.96, while the broader Topix slid 1.06% to 2,651.47.

The Dow Jones Industrial Average and S&P 500 closed lower on Monday, retreating from Friday’s record high closes and six straight weekly gains as Treasury yields rose and investors wary of high valuations awaited earnings from major companies.

Japan’s local media reported that the Liberal Democratic Party (LDP) and its coalition partner Komeito may lose its majority in the lower house in the Oct. 27 election.

A report last week said the LDP may not reach the 233 seats it needs for an outright majority in the 465-seat chamber.

Prime Minister Shigeru Ishiba dissolved the lower house of parliament on Oct. 9, setting up the snap election.

“The market does not like turmoil or uncertainties. The LDP may need to find another party to maintain the majority in the lower house, which means it may have to alter some of its policies,” said Shigetoshi Kamada, general manager of the research department at Tachibana Securities.

“The Nikkei tended to be on the upward trend ahead of a nationwide election, but this time it’s the opposite. So, investors needed to draw a scenario from scratch.”

Uniqlo-brand owner Fast Retailing fell 3.18% to drag the Nikkei the most. Chip-making equipment maker Tokyo Electron fell 3.08% and chip-testing equipment maker Advantest slipped 2.7%.