Stocks Rise With Bond Yields on Japan, Gold Jumps: Markets Wrap

(Bloomberg) — Japan’s election of a pro-stimulus leader shook up global markets, sending stocks surging on prospects for more spending, while currencies and bonds weakened, driving investors toward alternative assets such as gold and Bitcoin.

Asian shares rose to a record and the Nikkei 225 index jumped 5% to an all-time high as Sanae Takaichi was in line to become Japan’s next prime minister. The yen slid almost 2% to 150 per dollar, while falling to a record low against the euro. Longer-maturity Japanese bonds slid the most in months on concern a Takaichi government may sell more debt to finance tax cuts. US Treasuries also fell along with bond futures for Australia.

Gold rose above $3,900 an ounce to yet another record, extending a rally that’s been a feature of commodity markets all year. Bitcoin also set another all-time high over the weekend. Oil advanced after OPEC+ agreed Sunday to revive just 137,000 barrels a day of halted supply — a slower pace than earlier this year. Equity-index futures for the US and Europe also rose.

“Investors are actively balancing the potential upside of stimulus against bond market risk,” said Dilin Wu, a strategist at Pepperstone Group. “Investors will need to watch Japan’s fiscal-monetary interplay, bond market movements, and yen volatility closely — these will be the main drivers of cross-asset positioning in the coming weeks.”

Stocks have been surging, looking past a US government shutdown and the threat of firing federal workers, as traders bet investments on artificial intelligence will eventually pay off for tech companies. Traders have speculated that the shutdown, which kicked in on Wednesday, will drive investors to haven assets in what market participants have begun to call the “debasement trade.”

Takaichi’s surprise victory in a ruling party leadership vote at the weekend reduced expectations that the Bank of Japan may hike interest rates as soon as this month while raising worries about more debt supply to finance stimulus. Overnight index swaps priced in about a 25% chance of an increase, down from 60% before the Liberal Democratic Party’s leadership vote.

Volatility in Japan’s longer-dated government bonds is on the rise and the moves may spill over to markets as far away as the US and UK, according to Goldman Sachs Group Inc. strategists.

Moves in Japanese government bonds have foreshadowed those of their global counterparts this year, with a spike in super-long yields in the Asian nation amplifying ructions fueled by fears of widening fiscal deficits.

Goldman’s warning sharpens the focus on longer-dated notes, which have come under scrutiny as governments ramp up borrowings and inflation proves stickier than expected.

“US conditions drive all these markets together,” said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong. “The Fed is cutting in an economy not in a recession, and upward inflation risk. That is bullish for US equity, and gold, and has implications for Asia.”

What Bloomberg strategists say…

Japanese bond traders are piling into the short end in early trading to underscore the steepening shifts anticipated in response to Sanae Takaichi’s victory in the ruling party leadership race. It seems bond traders are anticipating the BOJ to ease off on hiking rates and the potential for the new leader to boost bond sales.

— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.

Defense equipment makers Kawasaki Heavy Industries Ltd., Japan Steel Works Ltd. and IHI Corp. all soared at least 10% at one point on Monday as Japanese defense and tech shares soared on speculation they’ll benefit from more government spending.

Meanwhile, French bond futures opened lower in Asia trading on concern that the nation’s government may collapse after President Emmanuel Macron appointed a broadly unchanged cabinet.

Corporate News:

Boeing Co. is guiding suppliers that 737 Max output could reach a 42-jet monthly tempo as early as October, according to people familiar with its plans. Tata Capital Ltd. is poised to start taking orders for an initial public offering that may raise as much as 155 billion rupees ($1.7 billion) in India’s biggest deal of its kind this year. Freeport-McMoRan Inc. said it found five more workers dead at the Grasberg copper mine in eastern Indonesia, following a mud flow that has halted production. Stellantis NV is planning to invest about $10 billion in the US as the troubled maker of Jeep sport utility vehicles and Ram pickups refocuses on the market that’s pivotal to its profits. Nikon Corp.’s stock rose its most in more than two weeks after disclosing that EssilorLuxottica SA increased its holding, suggesting the Ray-Ban maker is placing a bigger bet on a pivotal supplier of chipmaking equipment. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.3% as of 6:50 a.m. London time Nasdaq 100 futures rose 0.4% The MSCI Asia Pacific Index rose 0.2% Japan’s Topix rose 3.4% Hong Kong’s Hang Seng fell 0.7% Euro Stoxx 50 futures were little changed Currencies

The Bloomberg Dollar Spot Index rose 0.4% The euro fell 0.2% to $1.1714 The Japanese yen fell 1.9% to 150.29 per dollar The offshore yuan fell 0.1% to 7.1467 per dollar The British pound fell 0.3% to $1.3442 Cryptocurrencies

Bitcoin rose 0.8% to $123,729 Ether rose 0.7% to $4,529.29 Bonds

The yield on 10-year Treasuries advanced three basis points to 4.15% Japan’s 10-year yield advanced 1.5 basis points to 1.675% Australia’s 10-year yield was little changed at 4.33% Commodities

Spot gold rose 1.2% to $3,931.64 an ounce West Texas Intermediate crude rose 1.4% to $61.71 a barrel This story was produced with the assistance of Bloomberg Automation.

–With assistance from Hideyuki Sano.

©2025 Bloomberg L.P.