Japan election: Exit polls suggest ruling party set to lose majority
NHK projected it "may be difficult for the ruling coalition to maintain their majority". Half of the seats in the upper chamber were being voted on in Sunday's election, with members elected for six-year terms. If the coalition takes home less than 46 seats, it would mark its worst performance since it was formed in 1999.Ishiba's centre-right party has governed Japan almost continuously since 1955, albeit with frequent changes of leader.The expected result underscores voters' frustration with Ishiba, who has struggled to inspire confidence as Japan struggles against economic headwinds, a cost-of-living crisis and trade negotiations with the United States.Many are also unhappy about inflation - particularly the price of rice - and a string of political scandals that have beleaguered the LDP in recent years.The coalition's loss would critically undermine its influence over policymaking, opening it up to major compromises with opposition parties, and could prompt Ishiba to quit less than a year after he was elected.The last three LDP premiers who lost a majority in the upper house stepped down within two months, and analysts had predicted that a significant loss in this election would yield a similar outcome.This would open the field for a potential run at the leadership by other notable LDP members, including Sanae Takaichi, who finished second to Ishiba in last year's general election; Takayuki Kobayashi, a former economic security minister; and Shinjiro Koizumi, the son of former Prime Minister Junichiro Koizumi.In any case, a change of leadership within the ruling party would almost certainly unleash political drama and destabilise Japan's government at a pivotal moment in US-Japan trade negotiations.
Support for the ruling coalition appears to have been eroded by candidates from the small, right-leaning Sanseito party, which drew conservative votes with its "Japanese First", anti-immigration rhetoric.Sanseito first gained prominence on YouTube during the Covid-19 pandemic, spreading conspiracy theories about vaccinations and a cabal of global elites.The fringe party's nativist rhetoric widened its appeal ahead of Sunday's vote, as policies regarding foreign residents and immigration became a focal point of many parties' campaigns.Going off the NHK exit polls, it is on course to win seven seats. Famous for its isolationist culture and strict immigration policies, the island nation has experienced a record surge in both tourists and foreign residents in recent years.The influx has further driven up prices for Japanese people and fuelled a sentiment among some that foreigners are taking advantage of the country, aggravating discontent.Against that same backdrop, Ishiba last week launched a task force aimed at tackling "crimes or nuisance behaviours committed by some foreign nationals", including those relating to immigration, land acquisitions and unpaid social insurance.
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Reuters
19 minutes ago
- Reuters
Yen firms as investors gird for political uncertainty
SINGAPORE, July 21 (Reuters) - The yen firmed on Monday after Japan's ruling coalition lost its majority in the upper house as investors braced for a period of policy paralysis and market tumult in the world's fourth-largest economy ahead of a deadline on tariff negotiations with the U.S. The Japanese markets are closed for the day leaving the yen as an indicator of investor angst. Prime Minister Shigeru Ishiba's Liberal Democratic Party returned 47 seats, short of the 50 seats it needed to ensure a majority in the 248-seat upper chamber in an election where half the seats were up for grabs. The yen firmed to 148.32 per dollar in early trading, staying close to the 3-1/2-month low it hit last week as the election result was mostly priced in by investors. It firmed a bit against the euro to 172.64. While the ballot does not directly determine whether Ishiba's administration will fall, it heaps political pressure on the embattled leader who also lost control of the more powerful lower house in October. Chris Weston, head of research at Pepperstone, said the LDP coalition could still partner with the Democratic Party for the People (DPP) to get the 50 seats required, and "that is helpful for the yen." "However, most importantly, PM Ishiba has been defiant in his stance to stay the course as PM, but his hand has been sufficiently weakened." The election result, while not entirely a shock to markets, also comes at a tricky time for a country trying to get a tariff deal with U.S. President Donald Trump before an Aug. 1 deadline. Japanese government bonds (JGBs) plunged last week, sending yields on 30-year debt to an all-time high, while the yen slid to multi-month lows against the U.S. dollar and the euro. If Ishiba resigns, the political maelstrom could be a trigger for foreign investors to sell Japanese shares and the yen, analysts said. Elsewhere, investor focus has been firmly on Trump's global tariff salvos, with a Financial Times report last week indicating the U.S. president was pushing for steep new tariffs on European Union products. The euro was steady at $1.163225 in early trading, while sterling last fetched $1.13417. The dollar index , which measures the U.S. currency against six others, was at 98.352. The New Zealand dollar eased 0.18% to $0.5951 after annual consumer inflation accelerated in the second quarter but stayed below economists' forecasts, leading markets to raise the chance of a rate cut next month given the broader economic weakness. In cryptocurrencies, bitcoin fell 1% to $116,939, holding below a record $123,153 reached last week.
Reuters
19 minutes ago
- Reuters
Asia shares, yen weather Japan uncertainty as earnings loom
SYDNEY, July 21 (Reuters) - Asian shares and the yen held their ground on Monday as Japanese elections proved bad for the government but no worse than already priced in, while Wall Street futures braced for earnings from the first of the tech giants. Investors were also hoping for some progress in trade talks ahead of President Donald Trump's August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union. There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest. In Japan, the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms. Ishiba expressed his intention to stay in the position, which along with a market holiday, limited the reaction and the yen was 0.4% firmer at 148.29 to the dollar. "Ishiba will try to govern with support from some within the opposition, but this likely means a looser fiscal policy and is not good news for bond yields," said Rodrigo Catril, a senior FX strategist at NAB. "History also suggests that domestic political uncertainty tends to keep the BOJ on the side-lines, so the prospect of rate hikes is now set to be delayed for a little bit longer." The Bank of Japan still has a bias to raise rates further but markets are pricing little chance of a move until the end of October. While the Nikkei (.N225), opens new tab was shut, futures traded up at 39,875 and just above the cash close of 39,819. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was flat, while South Korean stocks (.kS11), opens new tab added 0.4%. S&P 500 futures and Nasdaq futures both edged up 0.1%, and are already at record highs in anticipation of more solid earnings reports. A host of companies reporting this week include Alphabet (GOOGL.O), opens new tab and Tesla (TSLA.O), opens new tab, along with IBM (IBM.N), opens new tab. Investors also expect upbeat news for defence groups RTX (RTX.N), opens new tab, Lockheed Martin (LMT.N), opens new tab and General Dynamics (GD.N), opens new tab. Ramped up government spending across the globe has seen the S&P 500 aerospace and defence sector rise 30% this year. In bond markets, U.S. Treasury futures held steady having dipped late last week after Federal Reserve Governor Christopher Waller repeated his call for a rate cut this month. Most of his colleagues, including Chair Jerome Powell, have argued a pause is warranted to judge the true inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61%, rising to 80% for October. Powell's reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge. The European Central Bank meets this week and is expected to hold its rates steady at 2.0% following a string of cuts. "The press conference will likely keep highlighting uncertainty and need to wait for tariff negotiations to conclude before deciding the next step," said analysts at TD Securities in a note. "Similarly, its 'meeting-by-meeting' language would be retained in the release." The euro was unchanged at $1.1630 in early trading, having dipped 0.5% last week and away from its recent near-four-year top of $1.1830. The dollar index was a fraction lower at 98.40 . In commodity markets, gold was little changed at $3,348 an ounce with all the recent action in platinum which last week hit its highest since August 2014. Oil prices were caught between the prospect of increased supply from OPEC+ and the risk European Union sanctions against Russia for its war in Ukraine could curb its exports. Brent edged up 0.1% to $69.36 a barrel, while U.S. crude added 0.1% to $67.39 per barrel.
North Wales Chronicle
an hour ago
- North Wales Chronicle
Japanese PM's coalition loses majority in upper house election
Mr Ishiba's Liberal Democratic Party and its junior coalition partner Komeito needed to win 50 seats on top of the 75 seats they already had to reach the goal. With just one more seat to be decided, the coalition had 47 seats. The loss is another blow to Mr Ishiba's coalition, making it a minority in both houses following its October defeat in the lower house election, and worsening Japan's political instability. It was the first time the LDP had lost a majority in both houses of parliament since the party's foundation in 1955. Despite the loss, Mr Ishiba expressed determination to stay on to tackle challenges such as US tariff threats, but he could face calls from within his party to step down or find another coalition partner. 'I will fulfil my responsibility as head of the number one party and work for the country,' he said. Mr Ishiba had set the bar low, wanting a simple majority of 125 seats, which meant his LDP and its Buddhist-backed junior coalition partner Komeito needed to win 50 to add to the 75 seats they already had. Exit poll results released seconds after the ballots closed on Sunday night mostly showed a major setback for Mr Ishiba's coalition. The LDP alone won 39 seats, better than most exit poll projections of 32, and still the number one party in the parliament, known as the Diet. 'It's a tough situation. I take it humbly and sincerely,' Mr Ishiba told a live interview with NHK. He said the poor showing was because his government's measures to combat price increases had yet to reach many people. The poor performance in the election will not immediately trigger a change of government because the upper house lacks the power to file a no-confidence motion against a leader, but it will certainly deepen uncertainty over his fate and Japan's political stability. Mr Ishiba could face calls from within the LDP party to step down or find another coalition partner. Soaring prices, lagging incomes and burdensome social security payments are the top issues for frustrated, cash-strapped voters. Stricter measures targeting foreign residents and visitors also emerged as a key issue, with a surging right-wing populist party leading the campaign. Sunday's vote comes after Mr Ishiba's coalition lost a majority in the October lower house election, stung by past corruption scandals, and his government has since been forced into making concessions to the opposition to get legislation through parliament. It has been unable to quickly deliver effective measures to mitigate rising prices, including Japan's traditional staple of rice, and dwindling wages. US president Donald Trump has added to the pressure, complaining about a lack of progress in trade negotiations and the lack of sales of US vehicles and American-grown rice to Japan despite a shortfall in domestic stocks of the grain. A 25% tariff due to take effect on August 1 has been another blow for Mr Ishiba. Mr Ishiba resisted any compromise before the election, but the prospect for a breakthrough after the election is just as unclear because the minority government would have difficulty forming a consensus with the opposition. Frustrated voters were rapidly turning to emerging populist parties. But the eight main opposition groups were too fractured to forge a common platform as a united front and gain voter support as a viable alternative.
