Asia stocks rise as M.East fears ease, Japan shrugs off election upset

Most Asian stocks rose on Monday, as concerns surrounding the Israel-Iran conflict were eased by a less intense-than-feared attack by Israel. Japanese stocks, in particular, surged, overcoming heightened political uncertainty.

Japanese markets led the way on Monday after the ruling Liberal Democratic Party (LDP) lost its parliamentary majority. Investors speculated that increased political uncertainty could reduce the likelihood of further interest rate hikes by the Bank of Japan (BOJ).

Israel conducted an attack on Iran over the weekend but avoided targeting Tehran’s oil and nuclear infrastructure, signaling a more controlled escalation in the protracted conflict. This perception supported gains across most Asian markets, while oil prices fell.

Regional markets followed a mixed close on Wall Street from Friday, with attention shifting to several major technology earnings and economic data scheduled for release this week. U.S. stock futures rose in Asian trading, driven by optimism over developments in the Middle East.

Japanese Stocks Rise as Political Uncertainty Limits Rate Hike Prospects
Japan’s Nikkei 225 and TOPIX indices rose 1.5% and 1.2%, respectively.

A coalition led by Japan’s ruling Liberal Democratic Party lost its parliamentary majority in Sunday’s election, raising uncertainties about the country’s political landscape for the coming years, according to local media. The LDP will now need alliances with smaller, regional parties, which could lead to a more divided economic outlook for Japan.

While this political shift introduces uncertainty in Japanese markets, it also reduces the likelihood of further rate hikes by the BOJ. The yen dropped sharply, benefiting export-focused stocks. The BOJ is set to meet later this week, and it is widely expected to leave rates unchanged.

Asian Markets Stable as Investors Eye Tech Earnings and Economic Data
Broad Asian markets mostly trended higher on Monday, with a focus on the upcoming U.S. technology earnings and key economic reports this week.

Five of Wall Street’s “Magnificent Seven” are scheduled to release their earnings, which will be watched closely for signals to guide broader equity markets.

Australia’s ASX 200 index increased by 0.1% ahead of critical inflation data due later this week. South Korea’s KOSPI gained 0.6% as leading technology stocks awaited further guidance on artificial intelligence trends.

Chinese markets underperformed, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indices fluctuating in a flat-to-low range. Key Purchasing Managers’ Index (PMI) data from China is expected this week, following several stimulus measures announced by Beijing over the past month.

Hong Kong’s Hang Seng index showed little movement.

India’s Nifty 50 futures pointed toward a positive opening, with expectations for some bargain buying following steep losses in October. Additional corporate earnings from Indian companies are due in the coming days.