Gold, oil and Bitcoin up as Asian stocks climb on rising stimulus bets in Japan

Japanese equities rose to record after pro-stimulus politician Sanae Takaichi gets set to become first female prime minister

A pedestrian looks at a stock market indicator board in Tokyo. The Nikkei index soared after the election of Sanae Takaichi as the head of ruling LDP party. EPA

Oil and gold rose and Bitcoin hovered near a recent peak on Monday, while a sharp rise in Japanese equities led Asian stocks higher as prospects of a looser monetary policy in Asia’s second-largest economy boosted risk appetite.

Japan’s Nikkei 225 Index climbed more than 4.78 per cent on Monday at 9.20am UAE time. The benchmark index crossed the 47,000 level for the first time, while the Japanese yen weakened, and the country’s long-term bonds fell after a party vote elevated pro-stimulus politician Sanae Takaichi to become the country’s first female prime minister.

The yen fell by 1.6 per cent to 150 against the US dollar, reaching a record low against the euro, according to Bloomberg data.

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“Japanese yen [is] weaker; market [is] watching new PM Sanae Takaichi,” Emirates NBD said in a note to investors on Monday.

The 30-year Japanese government bond declined sharply, sending the yield to the brink of a record high. Meanwhile, the yield on the two-year note fell, reflecting expectations of delayed interest rate increases by the Bank of Japan.

Ms Takaichi, considered a pro monetary stimulus lawmaker, has led the race to become Japan’s new prime minister among five candidates in the Liberal Democratic Party vote. She will replace the outgoing Prime Minister Shigeru Ishiba.

Markets move on politics as gold and Bitcoin surge

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“The week kicked off on a positive note in Japan after the ruling LDP chose Sanae Takaichi as its next leader – she is now set to become the country’s next prime minister and is known for her preference for easy fiscal and monetary policies,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“Easier fiscal policy and more government spending are, of course, not great news for Japanese bonds, which have already seen yields rise steadily since 2020.”

However, Hitoshi Asaoka, chief strategist at Asset Management One said although the market welcomes Ms Takaichi’s spending plans, “whether she can achieve that goal is not certain, as the LDP is still a minority party”.

“The Nikkei may retreat once before year-end," he said.

In broader Asian markets, China’s benchmark Shanghai Composite SE Index rose by 0.52 per cent while India’s BSE Sensex Index advanced 0.32 per cent.

US government shutdown continues

The government shutdown chaos in the US is continuing with labour unions approaching courts to stop mass redundancies by the Trump Administration. The Bureau of Labour Statistics did not release payroll data on Friday, which is one of the indicators the US Federal Reserve uses to make decisions on interest rate reductions.

“The data scheduled for this week will also be delayed if the shutdown continues – a scenario currently given a 60 per cent –80 per cent chance,” Ms Ozkardeskaya said.

The market impact of the political deadlock that has caused the shutdown has been limited so far.

The S&P 500 closed flat on Friday after hitting multiple record highs in preceding weeks. The Down Jones Industrial Average index added 0.5 per cent, while the Nasdaq Composite index slipped 0.28 per cent at close of trade in New York.

S&P 500 mini equities futures are up 0.31 per cent while Nasdaq 100 futures have gained 0.43 per cent.

Gold prices have risen about 50 per cent this year. AFP

Oil climbs

Crude prices strengthened on Monday after the Opec+ group of oil producers revealed a modest and less-than-expected increase in oil production, quelling fears of a surge in supplies.

Brent, the benchmark for two thirds of the world's oil, rose 1.44 per cent to $65.46 a barrel at 6.16pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 1.38 per cent to $61.72.

Both benchmarks fell sharply last weak ahead of the Opec+ meeting over the weekend. Brent fell 8.1 per cent, the largest weekly loss in over three months, while WTI tumbled 7.4 per cent for the same period.

Opec+ on Sunday agreed to another production increase for November as the supergroup of oil producers continued to unwind production cuts implemented two years ago.

The group, which includes Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman, decided to raise production by 137,000 barrels per day for next month, similar to the October levels of increase, Opec+ said.

The group said the "steady global economic outlook and current healthy market fundamentals" were the reasons for the move.

“The Opec/non-Opec group of 8’s decision on Sunday to increase their collective November production target by a nominal 137,000 bpd sparked short-covering,” Vanda Insights said in a note to investors.

“With the Opec+ decision tempering the oversupply worries that had gripped sentiment last week, any further rebound in crude will be contingent on the market’s fresh assessment of the Russia supply risk premium.”

Bitcoin and gold

Gold prices continued to surge on Monday, hitting another record as bullion powers towards $4,000 an ounce mark.

The precious metal rose 1.19 per cent to $ 3,931.84 an ounce after investors piled into the safe haven asset amid continued US government chaos that undermines the country’s already shaky economy.

Bullion has surged almost 50 per cent this year, as economic and geopolitical uncertainties as well a rise in global central banks’ purchases to diversify their asset base provided major tailwinds.

Bitcoin, the largest digital asset climbed to $125,689 over the weekend and remained in touching distance of its all-time high on Monday hovering at $123,701.58, according to Binance data.