Asian Shares Rise as Japan’s Nikkei Hits Fresh Record on Historic Election Victory

BY COMFORT OGBONNA

Asian stock markets were mostly higher on Tuesday, led by a powerful rally in Japan where shares surged to new record highs following a landmark election victory that ushered in the country’s first female prime minister. Investors across the region reacted positively to expectations of political stability and pro-growth reforms, even as global markets remained alert to valuation concerns, interest-rate uncertainty, and upcoming economic data from the United States.

Japan’s benchmark Nikkei 225 jumped 2.3% to 57,650.54 in afternoon trading, extending gains from the previous session when the index surged 3.9% to a record close. The rally followed a landslide parliamentary election win by the political party led by Sanae Takaichi, fueling optimism that her administration will push through long-anticipated reforms aimed at revitalizing the economy, strengthening corporate governance, and supporting equity markets. The decisive outcome reduced political uncertainty and reinforced investor confidence that policy momentum would be maintained.

Elsewhere in the region, market moves were more subdued. Australia’s S&P/ASX 200 slipped less than 0.1% to 8,867.40 as investors digested mixed signals from commodity prices and global growth prospects. South Korea’s Kospi edged up less than 0.1% to 5,301.69, while Chinese markets posted modest gains. Hong Kong’s Hang Seng rose 0.5% to 27,163.37, supported by selective buying in technology and financial stocks, and the Shanghai Composite added nearly 0.2% to 4,130.00 as investors remained cautious amid ongoing concerns about China’s economic recovery.

Wall Street provided a supportive backdrop after the U.S. stock market closed out last week with its strongest daily performance since May. Even so, lingering worries continue to hover over U.S. equities, particularly criticism that stocks have become increasingly expensive after a prolonged run to record levels. On Monday, the S&P 500 rose 0.5% to 6,964.82, moving closer to its all-time high set two weeks earlier. The Dow Jones Industrial Average edged up less than 0.1% to 50,135.87, while the Nasdaq composite outperformed with a 0.9% gain to 23,238.67.

A persistent concern among investors is whether the massive spending by Big Tech and other corporations on artificial intelligence will ultimately translate into sufficient profits to justify the investment boom. Despite the uncertainty, enthusiasm around AI continued to lift select stocks. Semiconductor makers were among the strongest performers, with Nvidia rising 2.4% and Broadcom climbing 3.3%, helping to propel broader market gains.

In the bond market, U.S. Treasury yields were relatively steady as traders positioned ahead of potentially market-moving economic reports later in the week. The U.S. government is set to release its latest monthly employment report on Wednesday, followed by the consumer inflation report on Friday. Both releases are closely watched, as they could significantly influence expectations for the Federal Reserve’s next moves on interest rates.

The Fed has paused its interest-rate cuts for now, but signs of a weakening labor market could pressure policymakers to resume easing sooner than expected. Conversely, stubbornly high inflation could keep rates on hold for longer. One reason U.S. equities remain near record highs is the belief that lower borrowing costs will eventually support economic growth, even as investors acknowledge that rate cuts can also risk reigniting inflationary pressures.

The yield on the 10-year U.S. Treasury note slipped to 4.20% from 4.22% late Friday, reflecting the market’s cautious wait-and-see stance. In commodities, gold climbed 2% to settle at $5,079.40 per ounce, continuing its volatile run after roughly doubling in price over the past year. Prices have swung sharply in recent months, ranging between about $4,500 and nearly $5,600. Silver showed even greater volatility, surging 6.9% on Monday.

Cryptocurrencies were mixed, with Bitcoin hovering just below $71,000 after briefly moving above that level over the weekend. The digital currency had fallen close to $60,000 last week, a steep drop from its record high set in October, underscoring the sharp swings that continue to characterize the market.

In energy trading early Tuesday, benchmark U.S. crude slipped 1 cent to $64.35 a barrel, while Brent crude, the international benchmark, edged up 1 cent to $69.05 a barrel. In currency markets, the U.S. dollar eased to 155.34 Japanese yen from 155.83 yen, while the euro dipped to $1.1902 from $1.1916, as traders weighed global growth prospects and shifting interest-rate expectations.