Japanese stocks hit another record Tuesday, building on the previous day’s surge following the election of a pro-stimulus advocate to lead the country’s ruling party, while gold also pushed to a new high amid the US government shutdown and French political upheaval.
The election of Sanae Takaichi, who is expected to become Japan’s prime minister this month, came as a surprise but ramped up optimism that she will embark on a campaign on monetary easing.
That sent the Nikkei 225 soaring almost five percent Monday and hammered the yen as investors began questioning the likelihood that the Bank of Japan will continue its interest rate hikes.
And the index continued its run-up on Tuesday, while the yen held losses.
Takaichi’s victory “removes uncertainty about the country’s policy direction”, said Saxo Markets’ Charu Chanana. “Her agenda is expected to continue a blend of fiscal support and ultra-easy monetary policy.
“For investors, that continuity means no abrupt tightening and ongoing coordination between the government and the Bank of Japan.”
Yields on 30-year Japanese bonds hit their highest level reflecting fears the country’s already colossal debt will balloon further.
Adding to the buying sentiment was an announcement by Advanced Micro Devices (AMD) and OpenAI of a partnership to develop AI data centres. The deal comes after OpenAI and US powerhouse Nvidia signed a contract for more than $100 billion in equipment.
And this week OpenAI struck deals with South Korean semiconductor giants Samsung and SK hynix for chips and other equipment that will be used in its Stargate project.
Traders continued their rush into tech firms, which have led a global advance this year that has seen several markets hit record highs.
Tokyo-listed Advantest gained more than two percent and Renesas more than four percent, while tech investment titan SoftBank was up 2.6 percent. TSMC in Taipei jumped 2.5 percent.
That helped push gains across most of Asia, with Singapore, Wellington, Taipei, Manila and Jakarta all up. Hong Kong, Shanghai and Seoul were closed for holidays.
The gains followed new records for the S&P 500 and Nasdaq in New York.
Gold hit a fresh peak of $3,977.44 — pushing closer to the $4,000 mark — as investors eye the US government shutdown, with Republicans and Democrats appearing no closer to an agreement.
Bets on the Federal Reserve cutting interest rates this month and a political crisis is adding to the allure of the precious metal, which is a go-to asset in times of uncertainty and turmoil.
“Democrats are refusing to provide the votes the ruling Republicans need to reopen federal departments unless an agreement is reached on extending expiring ‘Obamacare’ healthcare subsidies,” National Australia Bank’s Rodrigo Catril wrote.
“Meanwhile Republican House Speaker Mike Johnson told his members not even to report to Congress unless the Democrats cave, insisting any healthcare negotiation be held after re-opening the government.
“Analysts expect the shutdown could last a few weeks before some agreement is reached.”
The upbeat mood on equity markets was reflected in the crypto sphere, with bitcoin hitting a record high of $126,251.
Tokyo – Nikkei 225: UP 0.7 percent at 48,264.98 (break)
Hong Kong – Hang Seng Index: Closed for a holiday
Shanghai – Composite: Closed for a holiday
Euro/dollar: DOWN at $1.1703 from $1.1713 on Monday
Pound/dollar: DOWN at $1.3480 from $1.3485
Dollar/yen: UP at 150.38 yen from 150.24 yen
Euro/pound: DOWN at 86.84 pence from 86.86 pence
West Texas Intermediate: UP 0.1 percent at $61.74 per barrel
Brent North Sea Crude: UP 0.1 percent at $65.54 per barrel
New York – Dow: DOWN 0.1 percent at 46,694.97 (close)
London – FTSE 100: DOWN 0.1 percent at 9,479.14 (close)
