Brent crude futures were down 4.2% and traded as cheaply as $71.99 a barrel
The yen hit a three-month low on Monday as Japan’s ruling party lost its parliamentary majority, while oil dropped after Israel’s strike on Iran was less severe than expected.
Japan’s Nikkei, after initially dropping, added 1.6% and the yen slid as much as 0.5% to 153.3 per dollar following the ruling Liberal Democratic Party’s (LDP) weakest result since 2009 in Japan’s weekend election.
Brent crude futures were down 4.2% and traded as cheaply as $71.99 a barrel after Israel’s response to an Iranian attack did not disrupt energy supplies.
In Japan, the Liberal Democratic Party which has ruled for most of the post-war years and junior coalition partner Komeito won 215 lower-house seats at Sunday’s election, public broadcaster NHK reported.
This falls well short of the 233 needed for a majority and the yen was pressured since investors figured any government that emerges is likely to make a dovish shift in economic policies.
The markets are likely to think this means more trouble for the yen with 155 the first target and the finance ministry’s line in the sand at 160, said Bob Savage, head of markets strategy and insights at BNY in a note.
Gains in the stock market, which often moves in the opposite direction to the yen as a softer currency can help exporters, were led by technology companies.
Wider currency markets were steady, leaving the dollar on course for its biggest monthly gain in 2-1/2 years as signs of strength in the U.S. economy and the prospect of a Donald Trump presidency have driven U.S. yields sharply higher.