Japanese stocks jump as Prime Minister Ishiba set to step down

Asia-Pacific markets traded mostly higher Monday as investors assessed Japan Prime Minister Shigeru Ishiba’s resignation announcement over the weekend, and eyed key economic data in the region.

Japan’s benchmark Nikkei 225^[1] rose 1.5% following the prime minister’s statement, which came after weeks of mounting pressure over his national election defeat late last year. The Topix climbed 1% to a record high.

Koizumi Shinjiro, the agricultural minister and son of a former prime minister, is a likely contender to take the helm, Stefan Angrick, head of Japan and frontier markets economics at Moody’s Analytics wrote in a Monday note. Meanwhile, Takaichi Sanae, protege of the late Prime Minister Abe Shinzo and a runner-up in last year’s party contest, is also a key contender.

Richard Kaye, portfolio manager at Comgest, said that the market’s “very positive response” Monday was “a little bit of surprise”, but it’s “reflective of the excitement surrounding Koizumi and Takaichi.”

Kaye pointed out that potential successor Takaichi, who is keen on deregulation and not keen on interest rate hikes, is “likely the candidate to drive growth and she will justify today’s market rally.”

The Japanese yen weakened 0.64% to 148.33 against the greenback, while Japanese bonds continued to sell off.

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Japan’s 30-year bond yield rose over 4 basis points to 3.272% after notching a record high last Wednesday, having surged more than 100 basis points this year. The yield on the 20-year debt is over 3 basis points higher at 2.676%.

Japanese government bond yields have been notching fresh highs^[2] as investors price in persistent inflation, tighter monetary policy, as well as fiscal uncertainty.

“Japan is now set for a period of extended uncertainty going into Q4 2025,” wrote analysts from BMI, a unit of Fitch Solutions. “Although the next LDP leader would ordinarily automatically become prime minister, it is theoretically possible for the opposition to band together under a rival candidate for the premiership.”

South Korea’s Kospi was 0.15% higher, while the small-cap Kosdaq jumped 0.47%.

Hong Kong’s Hang Seng index^[3] rose 0.48%, while the mainland’s CSI 300 was flat.

Australia’s benchmark S&P/ASX 200 slid 0.38%.

China’s trade data for August will also be in focus.

Oil prices inched higher after OPEC+ announced over the weekend it will lift oil production again starting in October^[4], though the group is slowing the pace of hikes. In an online meeting Sunday, eight OPEC+ members agreed to lift production by 137,000 barrels a day starting in October, far below the increases of around 555,000 bpd in September and August, and 411,000 bpd in July and June.

Global benchmark Brent^[5] added 0.53% to $62.2 a barrel, while U.S. West Texas Intermediate^[6] futures traded 0.6% higher at $65.89 per barrel.

U.S. stock futures were little changed on Sunday as investors gear up for a data-heavy week that includes two closely watched readings on inflation. The producer price index report for August is due out Wednesday morning stateside, followed by the consumer price index on Thursday.

Last Friday in the U.S., all three major averages closed lower after a weaker-than-expected jobs report gave way to worries about a slowing economy, even as expectations for a Federal Reserve rate cut were solidified.

The S&P 500^[7] finished down 0.32% at 6,481.50, while the Nasdaq Composite^[8] declined 0.03% to settle at 21,700.39. The Dow Jones Industrial Average^[9] closed down 220.43 points, or 0.48%, at 45,400.86.

All three leading indexes had reached fresh record intraday highs earlier in Friday’s session. At their peaks, the broad market index, the tech-heavy Nasdaq and the blue-chip Dow were up about 0.5%, 0.8% and 0.3%, respectively.

— CNBC’s Brian Evans and Sean Conlon contributed to this report.