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Asia Pacific Shares: Nikkei Tumbles After Japan PM Abe Confirms Resignation

The major Asia Pacific stock indexes were mixed on Friday as investors continued to assess the impact of recent developments from the U.S. Federal Reserve. The price action across the board suggests investors are worried about a lack of detail in the new Fed policy shift while Japanese investors were roiled as Prime Minister Shinzo Abe resigned for health reasons.

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 23882.65, down 326.21 or -1.41%. Hong Kong’s Hang Seng index finished at 25422.06, up 140.91 or +0.56% and South Korea’s KOSPI Index closed at 2353.80, up 9.35 or +0.40%.

Fed Makes Major Policy Shift

U.S. Federal Reserve Chairman Jerome Powell announced Thursday a major policy shift by the U.S. Central bank to “average inflation targeting.” That means the Fed will allow inflation to run “moderately” above the central bank’s 2% goal “for some time” after periods when it has run below that objective.

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The Fed also adjusted is view of full employment to allow gains in the labor market to run more broadly. That indicated that the central bank will be less inclined to raise interest rates when the unemployment rate falls, as long as inflation does not creep up as well.

Stocks initially jumped as investors bet interest rates would remain low for longer and more stimulus was likely. But share markets have since been choppy, with some traders disappointed that the Fed did not reveal more details about how the new framework will work or provide any clues as to what it will do at its next policy meeting.

Japan’s Prime Minister Shinzo Abe, Confirms Resignation Over Health Concerns

Japanese Prime Minister Shinzo Abe has confirmed that he will step down due to worsening health, bringing an early end to his stint as the longest-serving premier of the world’s third-largest economy.

In response to the news, Japan’s Nikkei 225 Index closed 1.4% lower on Friday, while the Japanese Yen strengthened against the dollar, trading 105.800.

Abe, who suffers from a chronic inflammatory bowel disease, told reporters during a televised press conference that his health started declining around the middle of last month. He confirmed his resignation saying he did not want his illness to result in any policy mistakes.

Abe has sought to revive Japan’s lackluster economy through a policy package dubbed Abenomics. He said Friday that the economic policy had succeeded in boosting jobs, and brought an end to 20 years of deflation.

China Shares Rise on Upbeat Economic Data, Listing Momentum

 

The Chinese stock market climbed Friday, with blue-chip shares clocking their best week in four, as sentiment was supported by improving economic data and a slew of new listings. Stocks clung on to momentum this week that was fueled by upbeat data showing improving industrial profits and a surge in the startup Chinext board.

Hong Kong Stocks Touch One-Month High on Economic Recovery Hopes

Hong Kong’s stock market rose on Friday, reaching its highest in over a month at one point, on expectations that global monetary policy will remain supportive and the spread of COVID-19 will further slow in the financial hub.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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