Asia report: Markets mixed as investors digest New Zealand, Germany elections
Markets in Asia finished mixed on Monday, with investors given plenty of political news to digest after general elections in both New Zealand and Germany over the weekend.
AUD/USD
$0.6534
22:12 26/04/24
GBP/NZD
NZD2.1020
22:12 26/04/24
Hang Seng
17,651.15
10:20 26/04/24
Nikkei 225
37,934.76
09:44 26/04/24
USD/JPY
¥157.8950
22:12 26/04/24
In Japan, the Nikkei 225 was up 0.5% at 20,397.58, as the yen weakened 0.22% against the dollar, last trading at JPY 112.24.
Prime Minister Shinzo Abe confirmed plans for a JPY 2trn stimulus package during the session, before calling for a snap election later in the day in a move that was widely expected.
On the mainland, the Shanghai Composite was down 0.35% at 3,340.81, and the smaller, technology-heavy Shenzhen Composite lost 1/24% to 1,963.90.
South Korea’s Kospi was off 0.35% at 2,380.40, while the Hang Seng Index in Hong Kong slid 1.36% to 27,500.34.
Investors were looking to Sunday’s federal elections in Germany, in which Angela Merkel’s incumbent Christian Democratic Union won the largest share of the vote according to exit polls.
The CDU and its allied CSU won 32.5% of the vote, according to the exit poll from broadcaster ARD, although it was a poorer-than-expected result.
Of interest, the relatively new far-right AfD won a sizeable 13.5% of the vote.
Germany uses the mixed-member proportional (MMP) system of voting, which means the number of seats a party wins broadly aligns with the popular vote.
It also makes it almost impossible for any single party to hold a majority, leading to coalitions of varying colours forming governments.
“With a fractious political landscape amid the rise of nationalist politics, this is likely to hold back Merkel's plan with France's Macron on further euro zone integration,” noted Mizuho Bank market economist Zhu Huani.
Oil prices were higher, with Brent crude last up 1.46% at $57.70 and West Texas Intermediate adding 0.88% to $51.11.
In Australia, the S&P/ASX 200 eked out gains of 0.03% to settle at 5,683.73, led higher by the healthcare sector while the hefty financials subindex was flat.
Across the Tasman Sea, New Zealand’s S&P/NZX 50 gained 0.7% to 7,869.77, as the country also dealt with the fallout of an uncertain election result on Saturday.
The incumbent National Party won the largest share of the vote at over 46%, although it wasn’t enough for Bill English to continue as Prime Minister as the right-leaning bloc of National and ACT received a reduced share of the vote.
Labour and the Greens, forming the left bloc and led by Jacinda Ardern, also failed to get over the majority line, leaving the populist New Zealand First party - led by controversial veteran MP Winston Peters - to decide which side to support.
Special votes, which include overseas electors and those who voted outside their constituency, were also still to be counted, and they traditionally have boosted the left block by a couple of seats.
Perhaps most significantly, two parties fell out of parliament in the election, including the centrist United Future party and the indigenous Maori party, both of which supported the previous minority National government.
New Zealand uses the same MMP system as Germany, meaning coalition or minority governments are also the norm.
The down under dollars were both weaker on the greenback, with the Aussie last behind 0.08% at AUD 1.2570 and the Kiwi retreating 0.83% to NZD 1.3742.