Japanese Stocks Post Gains on Yen’s 1-Year Low

Japanese stocks increased on Monday as the safe-haven yen posted a one-year low and after the US Senate passed a funding bill that averted a government shutdown.

The Nikkei 225 index gained as much as 1.60%, recouping losses from its lowest close in over a month posted last week. The index was last trading 0.31% lower.

The Japanese stock market also found support on the Bank of Japan’s (BOJ) Tankan quarterly survey, which showed business sentiment in the country rose to 9 in the three months ending September 30 from the second quarter’s reading of 5.

Still, the rest of Asian equities traded mixed, with Australia’s S&P/ASX 200 shedding 0.22%. The country’s energy sector also lost 0.35% due to lower crude prices in the previous week. South Korea’s KOSPI index was trading flat at ₩2,465.07.

Less trading activity was also observed as the Hong Kong market was shut for a holiday, while markets in mainland China had been closed since Friday for Golden Week, which occurs until this week’s end.

In the currency space, the yen slipped against the US dollar to 149.74 on Monday, marking its lowest level since October 21, despite the greenback’s broader climb pausing after the dollar index posted a ten-month high last week.

US Funding Bill Provides Some Market Relief

The US Senate on Saturday voted to clear a last-minute spending bill that helped the government avoid a shutdown that would have been detrimental to the world’s largest economy and the country’s people.

The resolution was passed three hours before the federal government shutdown would have occurred. The short-term bill allows the government to continue running for 45 days or through November 17.

The clearance also means the House and Senate have more time to complete their funding legislation, while important data releases, including monthly non-farm payrolls, set to be published on October 6, can proceed as scheduled.

However, strategists said the risks of a shutdown have only been suspended, not eliminated, although the reduced uncertainty may provide markets with some breather. Still, they expect market volatility to remain high as investors await the next trigger, which could be key economic reports.