On November 21, 2024, Japanese Prime Minister Shigeru Ishiba is set to unveil a significant economic stimulus package worth ¥21.9 trillion (approximately US$140 billion). This package aims to tackle pressing issues such as inflation, wage growth, and support for low-income households. It is expected to have an overall economic impact of around ¥39 trillion, with ¥13.9 trillion sourced from the general account [47847838].
The stimulus plan also emphasizes investment in critical sectors such as semiconductors and artificial intelligence, reflecting Ishiba's commitment to enhancing Japan's technological capabilities [47847838]. However, this initiative will add to Japan's already substantial debt load, raising concerns about fiscal sustainability. Notably, concessions were made to the Democratic Party for the People to secure funding approval for the package [47847838].
In the context of recent market movements, Asian shares displayed a mixed performance as the U.S. dollar strengthened against the yen, which was trading at 146.51. Japan's Nikkei 225 index rose by 2%, closing at 38,552.06, following Ishiba's election as the leader of the Liberal Democratic Party [d7c5e75f].
Despite the positive movement in Japan, the broader Asian market faced challenges, with Hong Kong's Hang Seng index declining by 1.4% to close at 22,124.37, amid rising tensions in the Middle East [d7c5e75f]. U.S. crude oil prices also increased to $71.10 per barrel, influenced by geopolitical factors [d7c5e75f].
As the implications of Ishiba's leadership and the new stimulus package unfold, the interplay between domestic policies and global economic trends will be critical in shaping market dynamics in the upcoming weeks. The Bank of Japan, under Governor Kazuo Ueda, has downplayed the likelihood of further interest rate hikes in the immediate future, contributing to cautious optimism among investors [d7c5e75f].