Japanese yen and stocks face volatility after election — Bloomberg

Japanese Prime Minister Shigeru Ishiba's ruling coalition suffered a defeat in the upper house parliamentary elections. Bloomberg reports this has weakened investor confidence and triggered yen volatility.

The Japanese currency initially strengthened to 147.79 against the US dollar before retreating to 148.48. Meanwhile, Japanese stocks also declined on Monday as markets reacted to concerns over the Liberal Democratic Party's electoral setback.

Analysts interviewed by Bloomberg suggest short-term uncertainty will weigh on Japanese assets. Nick Twidale of ATFX Global Markets warns the yen and Japanese stocks could face further pressure if political instability grows. The Bank of Japan is also expected to maintain its current monetary policy until the economic outlook becomes clearer.

Hui Shi Yeo of iFAST Financial notes that markets may grow more sensitive to political developments, while adding that the resulting volatility could create opportunities for long-term investors.