Nikkei cool on poll outcome

JAPAN&rsquo;S Nikkei stock index ended the day down yesterday as an early boost from Sunday&rsquo;s landslide election victory for the Democratic Party of Japan (DPJ) over the ruling Liberal Democratic Party (LDP) was quickly reversed.<br /><br />The benchmark Nikkei-225 closed down 0.4 per cent at 10,492.53, despite gaining 196.78 points, or 1.87 per cent in the first 15 minutes of Monday trading to reach an 11-month intraday high of 10,730.92.<br /><br />Julian Jessop, chief international economist at Capital Economics, said the limited positive impact of the election result was because a DPJ victory had been expected, adding that the party might seek to reverse financial reforms.<br /><br />&ldquo;Talk that the DPJ would adopt a stimulatory fiscal policy and boost consumer spending more than the LDP would have done certainly seems wide of the mark,&rdquo; said Jessop.<br /><br />&ldquo;Less positively, the DPJ has indicated it would roll back... improvements in labour market flexibility and deregulation that have helped the economy and corporate profitability in recent years,&rdquo; he added.<br /><br />The DPJ swept to victory on the back of promises to help families with around $75bn (&pound;46bn) in financial handouts, which it plans to pay for by shaving the country&rsquo;s budget and selling off state assets.<br /><br />Party leader Yukio Hatoyama, who is sitting down with coalition allies to form a government, said the party would also rein in bond issuance.<br /><br />&ldquo;We need to do some soul-searching about the past practice of spending freely without limit and then selling bonds if there was a budget shortfall,&rdquo; he said.