Japan’s Nikkei surged more than 1% to a record, propelled by a weakening yen and expectations of increased government support. The yen fell to 159.29 per dollar, its lowest level since July 2024, amid reports that Prime Minister Sanae Takaichi is considering a snap lower house election on February 8. The so-called “Takaichi trade” has driven Japanese government bond yields higher while boosting equities, as investors anticipate policies designed to support growth.
Fred Neumann, chief Asia economist at HSBC, noted that the election outcome could influence the Bank of Japan’s rate decisions. “Easier fiscal policies and pro-growth reforms reduce downside risks to growth and inflation,” he said, but added that further yen weakness could prompt more hawkish commentary from the central bank.
Elsewhere, Chinese stocks gave back early gains, with the blue-chip CSI 300 index down 0.15%, after regulators unexpectedly tightened margin requirements to curb overheating in the equity market. Despite this, China posted a record $1.2 trillion trade surplus in 2025, driven largely by exports outside the United States.
MSCI’s Asia-Pacific index rose 0.5%, marking a fresh record high. U.S. stock futures slipped 0.19%, while European futures were broadly flat, signaling a muted start to trading in the West.
Commodities and Currencies in Focus
Geopolitical tensions helped push silver above $90 per ounce for the first time, up nearly 5% on the day and surging 27% since the start of the year. Gold also rose above $4,600 per ounce, extending gains following a strong 2025. Oil prices wavered as President Donald Trump urged Iranians to continue protesting, prompting Tehran to accuse him of encouraging unrest.
In the currency markets, the U.S. dollar remained broadly steady at 99.184 on the dollar index after earlier volatility linked to concerns over Federal Reserve independence. Recent data showed moderate underlying U.S. inflation pressures, which economists say keep the door open for potential rate cuts later in 2026, though most analysts expect the Fed to hold rates steady in the near term.
“Markets see recent threats to Powell as political rather than an institutional challenge,” said Steve Lawrence, chief investment officer at Balfour Capital Group. “This reinforces confidence in existing guardrails around the Fed.”
Overall, Asian investors balanced the potential for Japanese stimulus, mixed U.S. economic signals, and heightened geopolitical uncertainty, driving equities and precious metals to record levels.