A surge in Japanese shares led Asia higher on Tuesday amid investor bullishness over all things AI, while the cloud of uncertainty over Federal Reserve independence favoured gold even as it hindered the dollar.
Global stock markets diverged on Tuesday as a historic surge in Asian equities collided with mounting political and economic friction in the United States. While Japan’s “Takaichi Trade” and AI enthusiasm drove regional indexes to all-time highs.
In share markets, Japan’s Nikkei returned from holiday with a jump of 3.3% to record highs, aided by a slide in the yen to historic lows and much talk of fiscal stimulus.
Reports confirmed Prime Minister Sanae Takaichi planned to call an early election in the hope of bolstering her coalition’s parliamentary majority, which would provide scope for more aggressive policies.
South Korea and Taiwan also hit all-time peaks, while Chinese blue chips scaled a four-year top.
”We see global equities continuing to climb in 2026, targeting circa 10% upside for the MSCI AC World to year-end,” said analysts at Citi in a note.
MSCI’s Broadest Index of Asia-Pacific Shares
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4% to a fresh record peak. In European markets, EUROSTOXX 50 futures added 0.3%, while DAX futures gained 0.1% and FTSE futures went flat.
S&P 500 futures eased 0.1% and Nasdaq futures 0.3% ahead of a key reading on U.S. consumer prices for December. Forecasts are for annual core inflation to nudge up to 2.7%, though analysts at Goldman Sachs are tipping 2.8%.
AI and Currency Drive Asian Gains
A rise in Japanese stocks propelled Asian markets upward on Tuesday, fueled by investor enthusiasm for AI developments.
Japan’s Nikkei share average hit an all-time high on Tuesday, surging 3.6 percent to 53,814.79 shortly after opening, fueled by a weaker yen and a catch-up to Wall Street’s recent rally.
The broader Topix also reached a record peak, rising 2.4 percent to 3,599.31, with exporters like Toyota Motor up 5 percent and Advantest gaining nearly 6 percent. Investors shrugged off U.S. concerns regarding Federal Reserve Chair Jerome Powell, focusing instead on positive global cues.
Meanwhile, uncertainty surrounding the Federal Reserve’s independence benefited gold, despite pressuring the dollar.
In equity markets, Japan’s Nikkei index rebounded from a holiday closure, soaring 3.3 percent to reach record highs. This was supported by the yen’s decline to historic lows and discussions of potential fiscal stimulus.
