On Tuesday (February 10), Asian stock markets showed strong performance in the morning session, with Japan’s Nikkei Index reaching a new historical high driven by the victory of Prime Minister Takanao Koshi in the general election. At the same time, the US dollar remained weak as the market awaited the upcoming release of US employment and inflation data, hovering near a one-week low. Gold and silver prices experienced a slight decline after two consecutive days of gains.
Under the positive impact of Prime Minister Koshi leading the Liberal Democratic Party to win the lower house election, the Nikkei 225 Index has been on the rise for three consecutive trading days, soaring over 2.5% in Tuesday’s early session to reach 57,960.19, setting a new intraday historical high.
The exchange rate of the Japanese yen against the US dollar currently stands around 155.85. Despite verbal warnings from the Japanese authorities on Monday to support the exchange rate, analysts generally expect the long-term trend of the yen to face pressure under Koshi’s government leaning towards expanding fiscal spending policies.
Carol Kong, currency strategist at the Commonwealth Bank of Australia (CBA), stated, “With the more aggressive stance of the Koshi government in further loosening fiscal policies, I believe the US dollar against the Japanese yen will eventually regain strength, and we maintain our forecast that the US dollar against the Japanese yen will rise to 164 by the end of the year.”
Boosted by the rebound of US tech stocks, overall performance in Asian stock markets was strong on Tuesday. The Taiwan Weighted Index rose over 1.7% led by heavyweight stocks like TSMC.
The strong demand for AI memory drove the continuous surge in the stock prices of Samsung Electronics and SK Hynix, with the South Korean KOSPI Index surging to a historical high area at one point in the early session but later seeing some pullback.
Investors this week are focused on the delayed release of the January non-farm payroll report and Consumer Price Index (CPI) due to the brief government shutdown in the US.
White House economic adviser and Director of the National Economic Council (NEC) Kevin Hassett commented on this on Monday. He pointed out that due to factors including slowed labor force growth, significant AI productivity gains, and decreased illegal immigration, US employment growth data in the coming months may decline. Hassett emphasized that this is not contradictory to the current strong GDP growth, urging the market not to panic over lower data.
The yield on the US 10-year Treasury bond fluctuated slightly on Tuesday, holding near 4.196%. The market currently expects the Federal Reserve (Fed) to initiate the first rate cut of the year in June and to cut rates twice this year.
Kees Verbaas, Head of Global Equities at Robeco, expressed optimism about the economic outlook. “Overall, while we see some cracks, we are actually quite optimistic about the economic situation,” Verbaas said. “Investment plans of large corporations are increasing rather than decreasing, which is generally favorable to economic activities.”
In international financial trends, Bloomberg previously reported that Chinese regulatory authorities recommended financial institutions control the size of holding US Treasury bonds due to concerns about concentration risk and market volatility.
US Treasury Secretary Scott Bessent stated on Monday that senior US Treasury officials visited China last week to “strengthen communication channels between Washington and Beijing.”
In offshore trading in Hong Kong, the US dollar against the Renminbi remained stable at 6.9167 yuan.
Analysts at Alpine Macro wrote in a research report, “Beijing’s primary goal is not to challenge the dominance of the US dollar, but to reduce vulnerability to the US dollar.”
Influenced by a slight uptick in the US dollar, spot gold fell by 1% on Tuesday to around $5,016 per ounce, significantly lower than the record high of $5,594 at the end of January. Silver prices also fell by 2.5% to $81.31 per ounce.
In the cryptocurrency market, Bitcoin dipped by 0.9% to $69,756, testing the support level of $70,000. Ethereum also fell by 1.1% to $2,098.
In the energy market, WTI crude oil futures edged down by 0.1% to $64.15 per barrel on Tuesday. Brent crude oil hovered around $68.9 per barrel.