FX.co ★ Victory of Shinzo Abe triggers sharp rise in stocks

An election outcome in a country can have a significant global impact if this country has the third largest economy in the world and its election results are hard to foretell. That is why, the victory for Shinzo Abe, Japan’s prime minister, gave a strong boost to most global stocks.

Most market participants were relieved to find out about his victory as it means that Japan’s ultra-loose monetary policy will continue and investors will be able to put in funds in riskier assets. Several records were set on Wall Street and the US dollar confidently rose higher. The landslide victory of the Liberal Democratic Party and its coalition partner, the Komeito party, in Japan’s general election outshine political tensions in Spain. Donald Trump’s sudden announcement that Janet Yellen could remain the Fed Chairperson also bolstered the increase in stocks.

All in all, financial markets were simply unable to thrust aside such significant events. The greenback hit highest level since July against the Japanese yen. The DXY, which measures the value of the US dollar relative to the major currency basket, went up. The European STOXX 600 and Japan’s Nikkei 225 also increased. The MSCI World achieved a new all-time high.