Japanese Stocks Drop After Ishiba Victory

Japanese stocks experienced a significant downturn, with the Nikkei 225 dropping over 4% following Shigeru Ishiba's unexpected victory in the ruling party's leadership race, raising concerns about potential interest rate hikes. Investors are reacting to Ishiba's support for the Bank of Japan's policy normalization and independence, which contrasts with the dovish stance of his opponent, Sanae Takaichi. The yen surged after the election results, creating caution among exporters and heightening market volatility. Additionally, geopolitical tensions in the Middle East, particularly following Israel's airstrike that killed Hezbollah chief Hassan Nasrallah, are adding to market uncertainty. Crude oil prices have risen slightly amid these tensions, with expectations of possible retaliation from Iran. Analysts suggest that the coming week may see further fluctuations in Japanese equities as investors await clarity on Ishiba's policies.