Yesterday’s resignation of Abe was a surprise to the markets. Japan’s benchmark index, the Nikkei 225, started the day by rallying 1.0% but retreated after the announcement. The index declined 0.5% for the day to 15,797.60. The biggest losers included financial companies, which accounted for most of the drop. The largest bank in Japan, Mitsubishi UFJ Financial Group, lost 1.9% to 1.02 million yen while Mizuho, the second-biggest Japanese bank, dropped 2.4% to 648,000 yen.

During times of financial turmoil it was tough for Shinzo Abe to maintain stability. He was not an effective prime minister. Investors did not feel he was doing anything of value to investors and the financial markets. Shinzo Abe held a press conference yesterday afternoon during which he resigned as Prime minister of Japan. He said he “lost his political energy” to steer the government. The Japanese economy is experiencing a slowdown recently. A stronger yen does not make the situation easier for exporters. The higher value of the Japanese currency makes profits of Japanese exporters lower since most of them derive their earnings from the American market. Investors in Japan will experience a period of uncertainty. It will be the time of choosing a new leader of the government and nobody knows who it will be.

Shares of energy and mining companies in the Asian-Pacific region gained.  Prices of copper jumped over $7,500 per ton while prices of crude oil increased over $76 per barrel of Brent oil. PetroChina increased 1.8% to HK$11.38 in Hong Kong. The biggest oil exporter in Japan, Inpex Holdings, gained 5.6% to 1.13 million yen. The largest trading company in Japan, Mitsubishi, jumped 2.5% to 3,230 yen. In Australia, Santos Limited rose 1.3% to A$13.17. BHP Billiton, the biggest mining company in the world gained 0.2% to A$38.50.

Adam Narczewski