Asia report: Political certainty sends markets higher

Asian markets ended higher on Monday, underpinned by election results in Japan and Australia, with investors seemingly brushing aside concerns that a stronger-than-expected jobs report from the US might see the Federal Reserve hiking rates.

Japan’s Nikkei 225 ended 3.98% higher at 15,708.82, while the smaller Topix added 3.79% to 1,255.79.

The gains came as the yen ran weaker against the dollar, with the currency last off 1.62% at JPY 102.17 per $1.

Upper house elections were held in the country on Sunday, with Prime Minister Shinzo Abe’s incumbent coalition winning a landslide victory.

Analysts said the win was set to make Abe’s economic plans - dubbed ‘Abenomics’ - far easier to push through.

“It is likely that a large-scale economic stimulus program, in the magnitude of at least JPY 10trn (2% of GDP), will be implemented in order to restart Abenomics,” said researchers at Societe Generale in a note.

Some of the measures to be included in the package will be policies to reduce economic inequalities among the citizens and regions of Japan.

The country’s major exporters rallied - Nissan added 5.23%, Sony was up 3.98% and Toyota finished 4.87% higher.

Ailing video games and technology developer Nintendo surged 24.54% after the launch of its Pokemon GO smartphone game was a roaring sales success over the weekend.

On the mainland, the Shanghai Composite added 0.27% to close at 2,996.04, while the Shenzhen Composite lost 0.56% to 2,000.97.

South Korea’s Kospi added 1.3% to 1,988.54, while in Hong Kong the Hang Seng Index finished 1.54% higher at 20,880.50.

Nonfarm payrolls in the US came in at 287,000 for June on Friday, well and truly beyond consensus expectations for a 175,000 rise.

The unemployment rate also edged higher to 4.9% against May’s 4.7%, though this was said to reflect more people entering the workforce as a result of the more buoyant labour market.

Oil prices were lower during Asian trading, with Brent crude last down 1.52% at $46.06 per barrel and West Texas Intermediate off 1.61% at $44.69.

In Australia, the S&P/ASX 200 added 2.04% to finish at 5,337.10, with the weighty financials subindex providing a 2.47% boost to the benchmark.

The major Australasian banks all rallied - Australia and New Zealand Banking Group surged 3.46%.

Sunday was a political day in Australia as well, with Prime Minister Malcolm Turnbull declaring his incumbent coalition victors in the extremely close federal vote, more than a week after counting began.

“With the Liberals now set to return to government, from a budgetary perspective, this will ease concerns of 'across the political floor' squabbling,” noted Oanda Asia Pacific senior trader Stephen Innes.

In New Zealand, the S&P/NZX 50 added 0.9% to reach 7,062.45, with the dual-listed Australasian banks also underpinning things on that side of the Tasman Sea.

Australia and New Zealand Banking Group added 3.3% in Wellington, and Westpac was up 4%.

The down under dollars both weakened against the greenback, with the Aussie off 0.36% at AUD 1.3259 per $1 and the Kiwi retreating 0.96% to NZD 1.3815.