Japan's Prime Minister Shigeru Ishiba to step down, paving way for new leader

A priority for the LDP's next leader would be restoring support for the ruling coalition

- Bloomberg

Japanese Prime Minister Shigeru Ishiba plans to resign to avoid splitting the ruling party, after weeks of calls for his departure following a second national election setback, NHK reported Sunday. Ishiba was expected to announce his decision at a press conference scheduled for 6 pm in Tokyo. His resignation would bring to an end a tenure marked by humiliating election results that stripped the ruling coalition of its majorities in both chambers of parliament and left investors unsure about Japan's fiscal plans.

The Liberal Democratic Party (LDP) was set to hold a vote Monday on whether to bring forward a leadership election by two years, in what looked increasingly likely to turn into a vote of no confidence in the premier as local media surveys showed support for an early race gaining steam. The vote is now set to be cancelled, according to Kyodo news.

The prime minister's impending departure is likely to fuel uncertainty in markets over the coming weeks until the LDP chooses a successor. The risk of further instability could weigh on the yen and longer-term bonds when trading opens Monday in Asia. The currency was one of the weakest performers among its Group of 10 peers last week, while yields on longer-term Japanese government debt reached fresh multi-decade highs.