Japan's Nikkei 225 increased 2% as Prime Minister Suga bows out of governing party's leadership race

September 7, 2021: -Shares in Japan jumped on Friday after Prime Minister Yoshihide Suga said he would not be running in the upcoming leadership election. In afternoon trade, the Nikkei 225 increased 1.97%, while the Topix index rose 1.62%. Japanese manufacturing stocks saw significant gains, with Fanuc increasing 3.16% while JFE Holdings jumped 6.31%.

The Japanese yen traded at 110.01 for each dollar, still more potent than around 110.4 seen against the greenback this week.

Suga bowing out of the leadership race for his party paves the way for a new prime minister. Suga is currently under fire for handling the Covid situation in Japan, which included hosting the Tokyo Summer Olympic Games while the city was under emergency.

“The cabinet approval rate has decreased a lot, and the Japanese confidence of people has become much weaker,” Hiromichi Shirakawa, chief economist for Japan at Credit Suisse, told CNBC on Friday.

“Under the continuous state of emergency declaration and soft lockdowns, we have not seen the light at the end of the tunnel yet,” Shirakawa said, adding that the next job of the Japanese prime minister is to restore the confidence of people who are “fairly exhausted,” instead of coming up with concrete economic, fiscal policy.

Mainland Chinese stocks were lesser, with the Shanghai Composite down 0.34%, whereas the Shenzhen component was down to 0.472%.