**Market Turmoil: Japan’s Nikkei Plummets Amidst Economic Uncertainty**
Japan’s stock market suffered a significant blow on Monday, with the Nikkei 225 index tumbling over 4% in response to a mixed bag of economic data and the election of incoming Prime Minister Shigeru Ishiba. The country’s retail sales climbed 2.8% year-on-year in August, surpassing expectations, but industrial production took a hit, dropping 4.9% year-on-year.
The yen’s volatility played a significant role in the market’s downturn, as traders reacted to Ishiba’s election win. Economists predict that the Bank of Japan will face no obstacles in raising interest rates, which could strengthen the yen and put pressure on Japanese exporters.
However, not everyone agrees with this assessment. Some experts argue that inflation remains a concern due to the weak yen, making it unwise for the Bank of Japan to hike rates. The election of Ishiba, who is seen as more hawkish on monetary policy, has only added to the uncertainty.
Meanwhile, China’s markets continue to surge, with the CSI 300 index recording its best week since 2008. The contrast between the two markets has led some to speculate that Japan’s market has become the “anti-China trade,” where Japan’s performance is inversely related to China’s.
China’s recent stimulus measures, including a mortgage rate cut and lower reserve requirements for banks, have boosted investor confidence. As a result, Japan’s market is feeling the pressure, with some predicting a continued decline in the face of China’s resurgence.
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