Impact of Japan election

The landslide victory of the opposition in Japan will cause stock prices to rise for the next two days due to anticipation of positive changes by investors. The Yen will rise as a result which in turn causes the dollar to drop. Furthermore, due to the easing of recession, demand for oil will be expected to turn better. This will create support for oil price between the range of USD$70 - USD$75.

The positive news in Japan will most likely lead asia market to rise irrgardless of the poor performance by US market on last friday. However, the joker in the pack will be China. How will China react to this piece of news? China have been on a downward correction for two weeks, this has causes capping ripple effect on the rest of asia market. Nevertheless, this does not means that there will be major correction happening anytime soon.

For this week, focus on mid cap companies and penny stocks. These will be the ones which are likely to have more play. Blue chip companies should be having its stock price correction or sideway trading for this week. As a result index will unlikely rally too much for this week nor will it fall that much due to bargain hunter entering the market to purchase.