Asian Stocks Rise, Nikkei Jumps After Takaichi Win: Markets Wrap
(Bloomberg) — Asian stocks rose at the open as investors took cues from a Wall Street rally on Friday, following a volatile week driven by concerns over valuations in technology stocks.
The Nikkei 225 Index surged as much as 5.7% to a record as a historic election victory by Prime Minister Sanae Takaichi buoyed markets. The Kospi Index — a poster child for artificial intelligence investments — jumped over 4%. US equity-index futures advanced after the underlying gauges rose about 2% on Friday amid dip buying, while Bitcoin also recovered from its tumble. Yields on 10-year Treasuries rose almost two basis points on Monday.
Gold and silver opened the week higher, even though the precious metals are still way off their record highs. Brent crude dipped around 1% as tensions eased in the Middle East.
The Dow Jones Industrial Average climbed to a record 50,000 on Friday, reflecting a shift toward cyclical stocks as investors pared exposure to technology. Monday’s rally in stocks sets up a critical week ahead, with markets gauging whether demand can broaden as scrutiny intensifies around valuations and the scale of investment tied to AI.
Traders were taking advantage of the selloff earlier last week, picking up some cheap stocks to extend the rotational trade into cyclicals and away from tech, said Tony Sycamore, an analyst at IG in Sydney. The Wall Street tailwind and Japan election results mean “at least for the very, very short term, we’re going to see a good risk-on session across Asian equity markets,” he added.
Meanwhile, the yen fluctuated Monday as Takaichi secured a historic election triumph. The result cleared the way for more fiscal stimulus under Takaichi, adding pressure on Japanese bonds while potentially lifting stocks. Yields on the nation’s 10-year government bond rose five basis points on Monday.
Japan’s election outcome reinforced expectations for looser fiscal policy and sustained pressure on the yen, with investors bracing for so-called Takaichi trades to dominate markets on Monday.
What Bloomberg strategists say…
Forex traders can’t expect such an unchallenging ride on shorting the yen after Sanae Takaichi’s LDP secured a big election victory, which could be the prompt for Japanese authorities to put up a clearer defense of the currency. Meanwhile, macro traders are on intervention watch and a coordinated bout of verbal support from Japanese politicians and BOJ members is not priced into forex markets.
— Mark Cranfield, Markets Live strategist. Click here for the full analysis.
Meanwhile, Friday’s rally pushed the S&P 500 to almost breakeven for the week. Still, US stocks face more selling this week from trend-following algorithmic funds, according to Goldman Sachs Group Inc.’s trading desk.
“The inability to transfer risk quickly lends itself to a choppier intraday tape and delays stabilization in overall price action,” Goldman’s trading desk team including Gail Hafif and Lee Coppersmith wrote in a note to clients Friday.
The market narrative has shifted from confidence in synchronized growth and abundant liquidity to uncertainty driven by volatility, labor-market weakness and AI-driven disruption, wrote Bob Savage, head of markets macro strategy at BNY.
With diversification under strain and financial conditions tightening, investors are forced to reassess risk, liquidity and policy assumptions, he wrote.
Elsewhere, the Thai baht strengthened after results from Sunday’s election showed the ruling Bhumjaithai party was on track to win the most seats and in pole position to form a coalition. The outcome may lift the nation’s stocks as the potential for policy continuity is a relief for those who feared further political dysfunction.
“Overall policy continuity is a scenario that may ultimately result in stability,” said Brendan McKenna, a strategist at Wells Fargo in New York. “Markets are usually comfortable with clarity and the ruling party winning offers a bit more clarity.”
In other political news, investors will be watching developments in the UK after Keir Starmer’s future is in the balance following a crisis over the appointment of Peter Mandelson as ambassador to Washington claimed the UK prime minister’s closest aide.
Back in the US, Treasury investors will prepare for a flurry of economic reports that are expected to offer clues for when the Federal Reserve intends to resume interest-rate cuts.
With markets attuned to the policy outlook, attention will focus on a busy US data calendar this week, highlighted by January payrolls on Wednesday and inflation figures two days later. The unusual clustering follows last month’s partial government shutdown, which delayed several key economic releases.
Traders see less than a 20% chance that the Fed will reduce rates next month, after policymakers decided to hold the benchmark at a range of 3.5% to 3.75% in January.
Corporate News:
DBS Group Holdings Ltd. reported fourth-quarter profit that missed expectations due to headwinds from lower rates and higher tax expenses. Apple Inc. is going to begin a 2026 product blitz with the iPhone 17e, updated iPads and fresh Macs. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.3% as of 9:40 a.m. Tokyo time Hang Seng futures rose 1.8% Nikkei 225 futures (OSE) rose 4.8% Japan’s Topix rose 3% Australia’s S&P/ASX 200 rose 1.5% Euro Stoxx 50 futures rose 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1828 The Japanese yen rose 0.2% to 156.87 per dollar The offshore yuan was little changed at 6.9308 per dollar The Australian dollar rose 0.2% to $0.7025 Cryptocurrencies
Bitcoin fell 0.4% to $70,357.1 Ether fell 0.4% to $2,083.95 Bonds
The yield on 10-year Treasuries advanced two basis points to 4.22% Japan’s 10-year yield advanced 4.5 basis points to 2.270% Australia’s 10-year yield advanced three basis points to 4.86% Commodities
West Texas Intermediate crude fell 0.6% to $63.17 a barrel Spot gold rose 1.3% to $5,030.85 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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