Yen, Kiwi Drop as Politics in Focus; Stocks Mixed: Markets Wrap

  • Yen drops on 2 trillion yen stimulus report; Kiwi dollar sinks
  • Merkel’s victory leaves her facing coalition talks in Germany

The yen declined on speculation Japan’s prime minister will press for a stimulus package alongside his expected call for a snap election — sending the nation’s stocks higher. The kiwi and euro both slid initially as ballot results foreshadowed potentially complex political coalition building.

New Zealand’s vote kicked off what could be weeks of coalition-building talks, weighing on the currency amid disappointment the ruling party failed to get a majority. The euro was modestly weaker against the dollar after Chancellor Angela Merkel won Germany’s election with a smaller share of the vote, with focus on a surprisingly strong result for a far-right party. South Korea’s currency rose as concerns over North Korean tensions faded, despite fresh rhetorical exchanges with the U.S. over the weekend.

Japan’s Shinzo Abe speaks later Monday, with a report that he may seek a 2 trillion yen ($18 billion) stimulus package to support the economy. Central banks could offer further direction to markets this week, with both Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi among those scheduled to speak.

Many investors have been advising to trim risk-taking in global portfolios after gains in stock prices pushed global equities to record levels last week. UBS Group AG, the world’s largest wealth manager, on Friday told clients worldwide to take some profit on their stocks as rising values make it more difficult to generate “significant” further gains.

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