Asian stock markets climbed to a fresh record on Wednesday, led by strong gains in Japanese shares, as investors positioned for the possibility of a snap election in Japan that could usher in additional fiscal stimulus.
Japan’s benchmark Nikkei index rose more than 1 per cent to a record high, buoyed by a weakening yen and speculation that Prime Minister Sanae Takaichi may call a lower-house election on February 8, according to local media reports. The yen fell to its weakest level since July 2024, trading at 159.29 per dollar, reviving talk of possible market intervention.
The prospect of looser fiscal policy and continued stimulus weighed on Japanese government bonds and reinforced what traders have dubbed the “Takaichi trade”, even as concerns linger over the country’s fiscal health.
Across the region, MSCI’s broad Asia-Pacific index rose 0.5 per cent to a record high, while U.S. stock futures edged lower and European futures pointed to a muted open.
Metals Surge, Oil Wavers
Heightened geopolitical tensions helped push silver above $90 an ounce for the first time, with prices up nearly 27 per cent in the first nine trading days of the year. Gold also climbed to another record, extending gains after a strong 2025.
Oil prices were volatile after U.S. President Donald Trump urged Iranians to continue protests, prompting Tehran to accuse Washington of encouraging political destabilisation and violence.
China, Inflation and the Dollar
Chinese stocks reversed earlier gains after authorities unexpectedly tightened margin trading requirements to cool an overheated market. Blue-chip shares had reached a 10-year high earlier in the week, while investors largely shrugged off data showing China posted a record trade surplus of nearly $1.2 trillion in 2025, driven by exports to non-U.S. markets.
In the United States, data showed moderate underlying inflation pressures, keeping expectations of interest-rate cuts alive later this year, though the Federal Reserve is widely expected to hold rates steady this month.
The dollar index was flat, stabilising after earlier gains sparked by concerns over political pressure on the Fed. Markets appeared reassured after global central bank officials publicly backed Fed Chair Jerome Powell, easing fears over institutional independence.
