Japanese Prime Minister Shinzo Abe said on Friday he would resign due to health problems, kicking off a search for a successor.
Abe, who has held the position since 2012, apologized for leaving a year early and as the country battles the coronavirus pandemic, which has battered Japan’s economy alongside the rest of the world’s. The 65-year-old, who has had ulcerative colitis since his teens, will remain as prime minister until a successor is chosen.
Read: Who will replace Shinzo Abe?
Abe became the longest continuously serving Japanese prime minister on Monday. He resigned as prime minister in his first term in 2007 after less than a year in power, also due to health problems.
Speculation had been rising after Abe made the second visit to a hospital in a week on Monday, but financial markets still appeared somewhat shocked by the prospect of searching for a new leader at a difficult time for the country.
Read:Here’s How Markets Could React if Japanese PM Abe Resigns Over Health Fears, Bank of America Says
The Nikkei 225 Index JP:NIK closed down 1.4%, although the official confirmation came after the market close, while the yen climbed against the dollar, which had already been under pressure after Federal Reserve Chairman Jerome Powell signaled lower-for-longer U.S. interest rates on Thursday.
“The resignation has sparked fear in the markets that the current Abenomics program of easy fiscal policy combined with accommodative monetary policy will change,” said Takuji Aida and Arata Oto, analysts at Société Générale.
The outlook: While there is no obvious successor to Abe, those analysts expect his policies will stay in place no matter who takes the reins. But it is more drama for investors in a year that has already been laden with big headlines and coronavirus upheaval.
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