Oil slides on Mideast respite, yen down as Japan govt loses majority

Reuters

Oil slides on Mideast respite, yen down as Japan govt loses majority

2024 10월 28 일, 오전 12:29 GMT

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Corrects oil price in paragraph 3, Fed expectations in paragraph 10

LDP loses majority in Japan; yen hits 153/dollar

Oil slides 4% on restrained Israel strike

'Magnificent 7' earnings, US job data in focus

SINGAPORE, Oct 28 (Reuters) -The yen hit a three-month low on Monday as Japan's ruling party lost its parliamentary majority, while oil tumbled after Israel's weekend strike on Iran bypassed oil or nuclear targets.

Japan's Nikkei .N225, after initially falling, rose 1.6% and the yen JPY=EBS slipped as far as 0.5% to 153.3 per dollar following the ruling Liberal Democratic Party's (LDP) weakest result since 2009 in Japan's weekend election.

Brent crude LCOc1 futures were 4.2% lower and traded as cheaply as $71.99 a barrel after Israel's response to an Iranian missile attack focused, so far, on missile factories and other sites near Tehran and not on disrupting energy supplies. O/R

In Japan, the LDP which has ruled for most of the post-war years and junior coalition partner Komeito won 215 lower-house seats at Sunday's election, public broadcaster NHK reported.

This falls well short of the 233 needed for a majority and the yen was squeezed since investors figured any government that emerges is likely to make a dovish shift in economic policies. .TFRX/

"The markets are likely to think this means more trouble for the yen with 155 the first target and (the finance ministry's) line in the sand at 160," said Bob Savage, head of markets strategy and insights at BNY in a note.

Gains in the stock market, which often moves in the opposite direction to the yen as a weaker currency can help exporters, were led by technology companies.

RISING DOLLAR

Broader currency markets were steady, leaving the dollar on course for its largest monthly rise in 2-1/2 years as signs of strength in the U.S. economy and the prospect of a Donald Trump presidency have driven U.S. yields sharply higher.

At 4.23%, benchmark 10-year Treasury yields US10YT=RR are up 43 basis points through October, against a rise of 16 bps for 10-year bunds DE10YT=RR and 23 bps for gilts GB10YT=RR.

Markets price a 95% chance of a 25-basis-point Federal Reserve rate cut at its November meeting. Odds for a bigger half-point cut were at 50% a month ago, according to CME's FedWatch tool. FEDWATCH

The euro EUR=EBS was steady on Monday at $1.0796 and down 3% through October. The New Zealand dollar NZD=D3 has lost nearly 6% through the month, additionally weighed by a dovish central bank and disappointing stimulus plans from China.

Elsewhere U.S. stock futures ESc1 rose 0.5% in early trade ahead of a big week of earnings and data.

Five of the "Magnificent Seven" group of megacap companies are set to report: Google parent Alphabet GOOGL.O, Microsoft MSFT.O, Facebook owner Meta META.O, Apple AAPL.O and Amazon AMZN.O.

The U.S. jobs report on Nov. 1 comes as investors are weighing whether a stronger-than-expected economy could lead to fewer interest rate cuts, while inflation readings are due in Europe and Australia.

Weekend data showed China's industrial profit dived 27.1% in September versus a year earlier.

Gold XAU=, which hit record highs last week, hovered just shy of those levels at $2,736 an ounce.

World FX rates YTD http://tmsnrt.rs/2egbfVh

Asian stock markets https://tmsnrt.rs/2zpUAr4

Reporting by Tom Westbrook; Editing by Christopher Cushing

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