Asian stocks rise as Tokyo hits new record

Asian markets moved higher on Tuesday, extending gains after a strong performance on Wall Street, while Japan’s Nikkei surged more than two percent to a fresh record high following Prime Minister Sanae Takaichi’s decisive election victory. 

The rally added stability to global trading after last week’s volatile swings across multiple asset classes, with technology companies recovering from earlier pressure linked to concerns over artificial intelligence spending.

Tokyo’s market was buoyed by expectations that Takaichi’s landslide lower-house election win could lead to increased fiscal stimulus and significant tax cuts. Technology stocks, which have driven much of the Nikkei’s record-breaking run over the past year, led the advance. SoftBank jumped more than 10 percent, while Tokyo Electron, Sony and Advantest also posted strong gains.

Despite the optimism, analysts cautioned that investors were already pricing in ambitious policy expectations. Market watchers noted that the new administration faces key decisions on balancing economic growth with security policies and whether to pursue measures such as cutting consumption taxes on food.

Elsewhere in Asia, equities climbed across Hong Kong, Sydney, Seoul, Shanghai, Taipei, Manila and Wellington, supported by continued strength in US markets where major technology companies including Microsoft, Meta and Nvidia helped drive gains. 

However, concerns remain about heavy spending in the artificial intelligence sector and uncertainty over when those investments will generate substantial profits.

Investors are now turning their attention to upcoming US economic data releases expected to shape expectations for Federal Reserve policy. Key figures due this week include delayed non-farm payrolls data, as well as closely watched inflation and retail sales reports. 

While some indicators suggest softness in the US labour market, economic advisers have urged investors not to overreact to potentially weaker job numbers, citing strong productivity growth and shifting demographic trends.

Currency markets saw the dollar edge slightly lower against the yen and major European currencies, while oil prices dipped modestly. Global investors continue to monitor economic signals and policy developments for guidance on the outlook for growth and interest rates.