Japan snap election may increase fiscal and China risks

A ruling party partner said he met Prime Minister Sanae Takaichi and 'wouldn't be surprised' if she called a snap Lower House election for Feb. 8 or Feb. 15; the yen weakened after the reports.

Reports say Japan's prime minister is considering a snap Lower House election in February. Hirofumi Yoshimura, head of coalition partner Ishin, told NHK he met with Prime Minister Sanae Takaichi and 'wouldn't be surprised' if she called a vote on Feb. 8 or Feb. 15. Markets reacted with a softer yen after those reports. The discussion is tied to the leader's stated plans for increased government spending. Key reported facts: - Hirofumi Yoshimura told NHK he met with Prime Minister Sanae Takaichi and said he "wouldn't be surprised" if she called a snap election on Feb. 8 or Feb. 15. - The Yomiuri newspaper earlier reported that Takaichi planned to dissolve parliament for a Lower House vote on those dates, citing unnamed government sources. - The yen has softened since Takaichi became leader of the Liberal Democratic Party and fell further after the reports. Summary: Markets weakened in response to reports of a possible February snap election, and officials have publicly flagged the prospect of dissolving parliament for a Lower House vote on Feb. 8 or Feb. 15. Undetermined at this time is whether the prime minister will formally set a date or the precise steps she will take next.