Asian Stocks Stay Flat; Japanese Shares Sink Ahead of Election, Yen Pressure

Asian Stocks Flat as Japanese Markets Struggle Ahead of Election

Overview of Asian Stock Performance

Most Asian stocks remained rangebound on Friday, lacking strong trading cues, while Japan’s shares faced steep losses ahead of the country’s highly anticipated general election. The yen, nearing a three-month low, further rattled sentiment due to concerns over potential government intervention in currency markets.

Regional markets took modest cues from Wall Street's slightly positive close overnight. However, U.S. stock index futures steadied in Asian trade as the focus shifted toward upcoming mega cap tech earnings next week.

Japanese Stocks Fall on Election Worries

Japan’s Nikkei 225 index dropped 1.1%, reaching a three-week low, while the TOPIX fell 0.8%. Investors grew cautious ahead of Sunday’s general election, where polls indicate that the ruling Liberal Democratic Party may struggle to secure enough votes, potentially leading to alliances with smaller parties. Such uncertainty could complicate Prime Minister Shigeru Ishiba’s ability to implement key economic and monetary policies.

The ongoing political uncertainty also clouds the Bank of Japan’s (BOJ) monetary policy outlook. Although the BOJ is expected to keep interest rates steady next week, soft consumer inflation data from Tokyo, which showed inflation below the 2% target, added pressure to the yen. This heightened concerns over potential government intervention in currency markets.

Broader Asian Markets Muted

Other Asian markets remained quiet, with China’s indexes slightly up after the People's Bank of China left its key policy rate unchanged. Hong Kong’s Hang Seng rose 1%, marking the best performance in the region, while Australia’s ASX 200 and South Korea’s KOSPI also saw slight gains.