Asian stock markets generally rose, with Japanese stocks reaching new highs under

# Long Yue

Asian stock markets rallied broadly on Tuesday, led by Japan. The Nikkei 225 surged over 2%, hitting fresh all-time highs for the third consecutive session, while equities in South Korea, Australia and other markets advanced in tandem. Meanwhile, commodities pulled back notably, with gold down 1% and silver plunging 2.5%. Market focus has shifted to upcoming key U.S. economic data to gauge the Federal Reserve’s policy path.

On Tuesday, February 10, Asian stocks extended their strong momentum, with Japanese equities taking the lead. Over the past weekend, Japanese Prime Minister Sanae Takaichi secured a landslide victory in the general election. This political certainty significantly boosted investor confidence, driving a sharp rally in Japan’s benchmark stock index.

The Nikkei 225 broke through the 57,000-point mark on Tuesday, rising as much as 2.52% intraday and notching a third straight record high. Market analysts noted that investors are actively engaging in the “Sanae Takaichi trade,” betting that her election triumph will bring about market-friendly policy continuity. Meanwhile, the MSCI Asia Pacific ex-Japan Index climbed 0.4%, reflecting overall optimism across regional markets.

Overnight gains on Wall Street also provided support to Asian bourses. After stabilizing and bouncing back from last week’s AI-driven sell-off, the S&P 500 and Nasdaq Composite rose 0.5% and 0.9% respectively. However, U.S. stock futures showed some weakness during Tuesday’s Asian session, with E-mini S&P 500 futures edging down 0.1%, indicating signs of fading momentum following the short-term rebound.

Despite bullish sentiment in equities, the commodities and foreign exchange markets painted a different picture. As the U.S. Dollar Index stabilized after Monday’s sharp decline, gold and silver prices retreated significantly, while crude oil slipped slightly amid position adjustments. Investors are now gradually turning their attention to U.S. retail sales, inflation and employment data due later this week for further insights into the Fed’s policy trajectory.

The Nikkei 225 extended gains to 2%, hitting another all-time high. The TOPIX also rose 1.08%, similarly setting a new record.

South Korea’s KOSPI climbed 1.21%, approaching its all-time closing high; Australia’s S&P/ASX 200 advanced 0.39%, on track for a third consecutive day of gains.

Offshore Chinese yuan (CNH) strengthened beyond the 6.91 per U.S. dollar level, a first since May 2023, last trading at 6.9094, up 57 pips on the day.

Spot gold fell 1% to $5,016.56 per ounce, while silver plummeted 2.5% to $81.31 per ounce.

In the oil market, WTI crude futures for March declined 0.1% to $64.15 a barrel.

## “Sanae Takaichi trade” dominates Asian trading

The robust performance of the Japanese market was the central theme during Tuesday’s Asian trading session. Sanae Takaichi’s landslide victory in the House of Representatives election eliminated political uncertainty and triggered substantial buying interest. The Nikkei 225 not only broke through the 57,000-point psychological barrier, but the TOPIX also rose 1.08%, hitting a fresh record high.

This optimism spilled over to other Asian markets. South Korea’s KOSPI climbed 1.21%, approaching its all-time closing high; Australia’s S&P/ASX 200 advanced 0.39%, poised for a third straight day of gains.

Kees Verbaas, Head of Global Core Equities at Robeco, struck a positive tone on the overall economic outlook. “Despite some cracks we are seeing, overall we are actually quite optimistic about the economic situation,” he stated. He noted that investment plans of large corporations are increasing rather than decreasing, which is generally beneficial for economic activity, emphasizing that “many AI supply chains are only possible thanks to emerging markets”.

## Dollar stabilizes, yuan strengthens

In the foreign exchange market, the U.S. Dollar Index hovered around 96.97 on Tuesday, near this month’s lows. On Monday, the index posted its largest single-day drop in two weeks, largely influenced by a Bloomberg report.

In response, analysts at Alpine Macro noted in a research report: “Enhancing the yuan’s global status is moving up the policy agenda.”

Earlier in the session, offshore Chinese yuan strengthened beyond the 6.91 per U.S. dollar mark for the first time since May 2023, last trading at 6.9094, up 57 pips on the day.

## Commodities pull back: gold, silver decline; oil slips slightly

After rising for two consecutive trading days, precious metal prices corrected on Tuesday.

Spot gold fell as much as 1% to $5,016.56 per ounce, while silver plunged 2.5% to $81.31 per ounce. Previously, driven by a weaker dollar, gold had hit a record high of $5,594.82 on January 29. The decline has since narrowed.

In oil markets, WTI crude futures slipped 0.1% to $64.15 a barrel.

Analysts attributed the oil price decline mainly to potential position adjustments, but tensions between the United States and Iran could limit further downside. The U.S. Department of Transportation has issued a maritime advisory urging U.S.-flagged vessels to stay away from Iranian waters, citing recent attempts by Iranian forces to force commercial ships into their territorial waters.

Current market pricing indicates the Federal Reserve will keep interest rates unchanged until June. CME Group’s FedWatch Tool shows markets price in only a 17.7% probability of a 25-basis-point rate cut at the Fed’s March 18 meeting. White House economic advisor Kevin Hassett stated on Monday that U.S. job growth may slow in the coming months due to the Trump administration’s immigration policies curbing labor force expansion and new artificial intelligence tools boosting productivity. This comment has added more attention to the upcoming employment data release.

Source: Wall Street News

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