The Tamesis
The Nikkei hit another record high on Tuesday, while Asian stocks also rose after gains on Wall Street.
Japanese stock market rose another 2.3% after Prime Minister Sanae took office Stunning election victory in high city.
Gains in global markets have brought some calm to trading floors after a roller-coaster ride across the asset spectrum last week, as technology companies hit by worries about spending on artificial intelligence have found their footing.
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Foreign investors sold more than $9.79 billion worth of shares last week, according to London Stock Exchange Group (LSEG) data on stock markets in South Korea, Taiwan, Thailand, India, Indonesia, Vietnam and the Philippines.
Most of this money was withdrawn from stocks in South Korea and Taiwan, but nearly $900 million was invested in Indian stocks after news broke that Indian stocks were being invested. The United States has agreed to a trade deal with New Delhiand cut tariffs from 50% to 18%.
Investors are also preparing for key U.S. data due this week, hoping to gain new insights into the world’s largest economy and an understanding of the Federal Reserve’s interest rate plans.
Foreign exchange reserve proceeds may help fund food tax cuts
Takahiro’s landslide victory in the House of Representatives election paved the way for greater fiscal stimulus and massive tax cuts.
Technology companies, a key driver of the Nikkei’s surge to multiple record highs over the past year, once again led the way, with shares of investment giant SoftBank rising more than 10%, while Tokyo Electron, Sony and Advantest also surged higher.
Japan’s Finance Minister Satsuki Katayama said on Tuesday that officials could consider using the $1.4 trillion foreign exchange reserve surplus as they discuss funding for a plan to cut food sales taxes.
These surpluses have been transferred to the general account in the past, she told a news conference.
However, UBS Securities’ Nozomi Moriya warned the prime minister that market expectations must be met.
“Whether such hopes are realized and exceeded is something to monitor as markets begin to price in expectations before they actually materialize,” she wrote.
“The city government now needs to make some key decisions, including whether to prioritize economic policy in addition to safety measures, and whether to prioritize growth and measures such as cutting food excise taxes.”
Hong Kong, Seoul, Shanghai, Singapore, Taipei, Manila, Mumbai, Bangkok, Jakarta and Wellington also saw gains.
As of the close, Hong Kong’s Hang Seng Index rose 0.6% to 27,183.15 points, and the Shanghai Composite Index rose 0.1% to 4,128.37 points.
Mumbai’s S&P BSE Sensex also rose 0.17%.
London and Frankfurt opened lower, but Paris edged higher.
Huge AI spending remains a concern
Another strong day on Wall Street boosted sentiment, with Seven Alliance members Microsoft, Meta and Nvidia leading the gains.
However, investors remain concerned about the huge amounts of cash being poured into the AI space and question when, if ever, profits will be realized.
Fiona Cincotta, senior market analyst at City Index, said: “Several large-scale technology achievements have once again raised investor concerns about huge spending, with Amazon, Google, Meta and Microsoft expected to spend approximately $650 billion to compete for artificial intelligence dominance.”
Attention also turns to the macro outlook this week, with Washington due to release key non-farm payrolls data on Wednesday, which was delayed from Friday due to the brief government shutdown.
Closely watched inflation and retail sales data are also due out soon.
The data came as the U.S. labor market showed signs of weakness, with President Donald Trump’s top economic adviser Kevin Hassett warning that more weak data was on the way.
“I think there should be a slight decrease in employment, but that’s consistent with the high GDP growth right now,” he told CNBC on Monday.
“People should not panic if you see a series of numbers that are lower than you are used to because population growth is falling again while productivity growth is soaring.”
- AFP Additional input and editing by Jim Pollard
See also:
Japanese stocks soar after Takahiro scores landslide victory in opinion polls
Australia and EU eye next trade deal, possibly this month
TSMC says its second US$17 billion factory in Japan will produce 3nm chips
Chinese solar panel maker shares rise after Musk team visit
Indian stocks, rupee soar on US trade deal, despite few details
Modi says huge EU-India trade deal is finalized
India’s 20-year data center tax break faces resource crunch
Canada Carney leads trade shift away from U.S. to China, India and Australia
