The Nikkei 225 Index surged as much as 5.7% to a record as a historic election victory by Prime Minister Sanae Takaichi buoyed markets. The Kospi Index — a poster child for artificial intelligence investments — jumped over 4%. US equity-index futures advanced after the underlying gauges rose about 2% on Friday amid dip buying, while Bitcoin also recovered from its tumble. Yields on 10-year Treasuries rose almost two basis points on Monday.
Gold and silver opened the week higher, even though the precious metals are still way off their record highs. Brent crude dipped around 1% as tensions eased in the Middle East.
The Dow Jones Industrial Average climbed to a record 50,000 on Friday, reflecting a shift toward cyclical stocks as investors pared exposure to technology. Monday’s rally in stocks sets up a critical week ahead, with markets gauging whether demand can broaden as scrutiny intensifies around valuations and the scale of investment tied to AI.
Traders were taking advantage of the selloff earlier last week, picking up some cheap stocks to extend the rotational trade into cyclicals and away from tech, said Tony Sycamore, an analyst at IG in Sydney. The Wall Street tailwind and Japan election results mean “at least for the very, very short term, we’re going to see a good risk-on session across Asian equity markets,” he added.
Meanwhile, the yen fluctuated Monday as Takaichi secured a historic election triumph. The result cleared the way for more fiscal stimulus under Takaichi, adding pressure on Japanese bonds while potentially lifting stocks. Yields on the nation’s 10-year government bond rose five basis points on Monday.
Japan’s election outcome reinforced expectations for looser fiscal policy and sustained pressure on the yen, with investors bracing for so-called Takaichi trades to dominate markets on Monday.
