Japanese Assets Most Vulnerable to U.S. Election Outcomes: Japanese markets are watching the upcoming U.S. election results
and their potential impact on Japanese assets.
While a win for Kamala Harris might support the Japanese yen,
a victory for Donald Trump could have varied effects on stocks and currency markets in Tokyo.
With multiple scenarios drawn for the path of Japanese assets,
investors are cautiously awaiting the election outcome and its impact on the Japanese economy.

Content

Impact of the U.S. Elections

Market Focus on Japan

Harris’s Policies

Dollar-Yen Volatility

Short-Term Effects

Tariff Increases

Impact of the U.S. Elections on the Yen and Japanese Stock Markets

A win for Kamala Harris could support the yen,
while a Trump victory might energize the Tokyo stock market
but pose a greater risk of a sharp decline for the yen.
Analysts warn that markets may face significant volatility if the U.S. election results are disputed.

Markets Focusing on Japan During the U.S. Vote Coun

Japanese markets are gaining special attention due to their size and liquidity,
as traders monitor the U.S. election results and their impact on the dollar and yen during Asian trading sessions.

Harris’s Policies and Expected Impact on the Yen

If Harris wins, she is expected to maintain an economic policy aimed at a soft landing for the U.S. economy.
This could potentially allow the Federal Reserve to lower interest rates if inflation doesn’t rise significantly,
strengthening the yen due to a narrower yield gap between Japan and the U.S.

Trump’s Return and Its Impact on the U.S. Economy and the Yen

On the other hand, Trump’s victory could boost the U.S. economy in the short term,
Tax cuts and regulatory easing will likely drive the dollar up and negatively impact the yen.

Potential Impact on the Yen and Dollar Prices

A stronger dollar could benefit Japanese exporters,
yet Trump’s plans for imposing tariffs may pose a risk to Japanese stocks.
If Trump wins, the focus will shift to the congressional elections
and the impact of a Republican majority on U.S. policies.

Expected Yen Decline if Trump Wins

Analysts at Crédit Agricole and Mizuho predict the yen
could fall to 160 per dollar if Trump wins, the lowest level in 38 years.

Close Race in Poll Results

Recent polls show that Harris and Trump are close in the election race,
increasing the likelihood of market volatility.
With a decline in the U.S. dollar and a rise in Treasury yields,
the election outcome could influence the prices of local assets in Japan.

Dollar-Yen Volatility

Implied volatility in the dollar-yen exchange rate has risen to its highest level since August,
reflecting expectations of increased fluctuations due to the election.

Short-Term Impact of Trump’s Victory on Japanese Stocks

Any boost to Japanese stocks from a Trump win may be short-lived if he imposes new tariffs,
especially in China, which could negatively impact the Japanese economy.

Tariff Increases and Their Effect on Japanese Exports

Masahiko Loo from State Street believes that if Trump imposes tariffs of up to 20% on imports,
Japan’s exports of cars and machinery could suffer,
potentially impacting the Japanese economy and slowing global growth.

Japanese Assets Most Vulnerable to U.S. Election Outcomes

Japanese Assets Most Vulnerable to U.S. Election Outcomes

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