Morning Brief: Nikkei 225 Drops On Abe Resignation News

Nikkei 225
Nikkei 225

Nikkei 225 fell on late trading after reports that Prime Minister Shinzo Abe will resign due to health problems. The other major Asian indices ended mostly higher. In Wall Street, Dow Jones and S&P 500 finished higher while Nasdaq retreated.

Nikkei 225 Daily Chart

Fed Signal A Shift in Policy Framework

The Federal Reserve Chairman Powell, in his speech in Jackson Hole, announced the much-anticipated policy framework shift. Federal Reserve will allow inflation to rise above the two per cent target. That points to lower interest rates for a longer time and will weaken the greenback. The Fed did not specify for how long inflation would be averaged but noted that any overshooting would not last for long and would be moderate. Fed did not determine how the new policy framework will work and add nothing new on what it will do at its next monetary policy meeting.

The initial jobless claims dropped for the week but remained above the one million mark. The improvement in initial jobless claims shows that employment is heading in the right direction, but there is a long way to go.

The economic calendar today includes US Personal Spending and Income for July. Later on the day, the University of Michigan’s Consumer Sentiment will also attract attention.

While the Nikkei 225 and ASX 200 ended lower the Singapore Straits Times index is 1.19% higher at 2,550. The Shanghai Composite index is 1.59% higher at 3,402, while the Hang Seng is 1.59% higher at 25,682.

European Stocks On Positive Foot

European stocks started slightly higher. The France Gross Domestic Product came in at -13.8% in the second quarter. Dax index started 0.32% higher at 13,138 although the Germany Consumer Confidence Survey dropped to -1.8, well below the forecasts of 1.2 in September. 

Crude Oil Prices Stabilize

Crude oil price continues the consolidation phase as the hurricanes didn’t damage the oil production in the Gulf Coast. Brent crude oil is 0.59% higher at 45.39, while the WTI crude oil is 0.53% lower at 42.81. 

Gold Higher On USD Weakness 

Gold is higher in early European trading session boosted by USD weakness. In one more volatile session, yesterday gold price tested the recent lows at 1,909 but managed to rebound after Jerome Powell’s speech. As of writing, gold is 1.13% higher at $1,950 while the silver price is 1.57% higher at $27.36.

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