Nikkei logs weekly drop as PM Ishiba rattles markets

SYDNEY – Japanese stocks posted their steepest weekly fall in a month on Friday, as Prime Minister Shigeru Ishiba’s seemingly shifting stance on interest rates roiled the yen and unsettled investors, while shipping shares dropped after a U.S. dock strike ended.

Though the Nikkei rose 0.2% to close at 38,635.62 for the day, it ended 3% lower for the week.

The broader Topix was up 0.4% to 2,694 and down 1.7% this week.

Ishiba, an erstwhile critic of the Bank of Japan’s aggressive monetary policy easing, won the backing of his ruling Liberal Democratic Party in a leadership vote last week and set off a surge in the yen.

That has reversed since he struck a dovish tone this week, saying Japan is not in an environment for additional rate hikes, and on Friday he called for a stimulus package to cushion rising living costs.

However, the losses in stocks, which tend to move in the opposite direction to the currency, have not fully recovered.

Uniqlo parent Fast Retailing rose 1.5% and contributed most to the Nikkei’s modest gain on Friday. Sanyo Shokai jumped 10.5% after the clothier announced a buyback.

Oil and coal, rising with oil prices on concerns over a widening war in the Middle East, and financials were among other gainers.

Shipping companies led losses, falling after a faster-than-expected resolution to a U.S. dock workers strike.

Kawasaki Kisen slid 9.7%, Nippon Yusen – which hit a record high on Thursday – dropped 9.4% and Mitsui O.S.K. Lines fell 6.4% in its heaviest trading day in 18 months.

“The early end of the ILA dockworkers’ strike is negative for the container shipping markets as the downward pressure on freight rates will resume,” Linerlytica container shipping analyst Hua Joo Tan said.

(Reporting by Tom Westbrook; Editing by Savio D’Souza and Rashmi Aich)