Stocks Extend Rally as Risk Assets Gain Momentum: Markets Wrap
(Bloomberg) — Asian stocks climbed to a record as a broad advance across risk assets took hold, with gains in tech stocks, Bitcoin and gold extending momentum from Friday’s rally on Wall Street.
The MSCI Asia Pacific Index climbed as much as 2.2% to an all-time high, while the Nikkei 225 Index surged as much as 5.7% to a record following a historic election victory by Japan’s Prime Minister Sanae Takaichi. The Kospi Index — a poster child for AI investments — jumped 3.7%. That came after US gauges rose about 2% on Friday to recoup some of the week’s losses.
The rally looks set to continue, with US and European equity-index futures gaining. As sentiment improved, Bitcoin recovered from its drop and Treasuries fell, with the yield on the 10-year benchmark rising two basis points to 4.22%. Gold and silver rose, though the precious metals were still well off their record highs.
As US investors rotate away from richly valued technology stocks — the Dow Jones Industrial Average pushed above 50,000 on Friday — Asian markets may benefit from comparatively lower valuations and stronger growth prospects. Monday’s rally shapes the week ahead, with markets watching for signs participation can broaden as investors reassess valuations and the scale of AI investment.
“The rebound feels less about chasing risk and more about fading uncertainty,” said Mohit Mirpuri, senior partner at SGMC Capital Pte, an investment office. “We saw strong US price action into Friday and clearer political outcomes in Japan and Thailand have helped anchor sentiment. Asia looks better positioned if global volatility continues to ease.”
Meanwhile, the yen strengthened against the dollar after Takaichi’s victory, moving away from a zone seen as triggering intervention. Traders will be watching the level of 159.45 per dollar reached in mid-January, the yen’s weakest since 2024. Government bond yields in the country fluctuated.
Elsewhere, the baht appreciated after Thailand’s ruling conservative party clinched a surprisingly solid election win.
What Bloomberg strategists say…
Takaichi’s overwhelming election win spurs expectations for more aggressive fiscal policies. That has the potential to boost global yields, many of which are already elevated amid inflation and issuance concerns, and higher borrowing costs would weigh on an already-fragile outlook for stocks worldwide.
— Garfield Reynolds, MLIV Team Leader. For full analysis, click here.
On Friday, a rally in stocks pushed the S&P 500 to almost breakeven for the week. Still, US equities 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.
“International investors are also taking the time to rethink and rebalance their portfolio,” said Francis Tan, chief strategist for Asia at Indosuez Wealth Management. The recent tech selloff gives investors another chance to plan some rotation from richly valued US tech stocks into other “possible substitutes around the world.”
In other political news, investors will be watching developments in the UK, where Keir Starmer’s future is in the balance. A crisis over the appointment of Peter Mandelson as ambassador to Washington has already claimed the UK prime minister’s closest aide.
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 Federal Reserve will reduce rates next month, after policymakers decided to hold the benchmark at a range of 3.5% to 3.75% in January.
In commodities, Brent crude dipped 0.9% as tensions eased in the Middle East.
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. Samsung Electronics Co.’s shares climbed as much as 6.4% after a report that the company will soon begin mass production of HBM4 memory chips, used as part of the buildout for artificial intelligence infrastructure. Shares of Montage Technology Co. jumped 60% in their Hong Kong debut on Monday after a share sale that raised $902 million. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 2:01 p.m. Tokyo time Japan’s Topix rose 2.3% Australia’s S&P/ASX 200 rose 1.9% Hong Kong’s Hang Seng rose 1.4% The Shanghai Composite rose 1.1% Euro Stoxx 50 futures rose 0.3% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1826 The Japanese yen rose 0.3% to 156.69 per dollar The offshore yuan was little changed at 6.9306 per dollar Cryptocurrencies
Bitcoin rose 0.3% to $70,862.54 Ether fell 0.3% to $2,086.11 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 2.280% Australia’s 10-year yield advanced four basis points to 4.87% Commodities
West Texas Intermediate crude fell 1% to $62.93 a barrel Spot gold rose 1% to $5,012.74 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Gabrielle Ng, Joanna Ossinger and Yihui Xie.
©2026 Bloomberg L.P.
