<figure id="attachment_3278557" aria-describedby="caption-attachment-3278557" style="width: 1600px" class="wp-caption alignnone"><img loading="lazy" class="size-full wp-image-3278557" src="https://media.freemalaysiatoday.com/wp-content/uploads/2026/02/46d6b881-13720815.webp" alt="" width="1600" height="1000" /><figcaption id="caption-attachment-3278557" class="wp-caption-text">Japan&#8217;s Nikkei surged 2,410.17 points to close the morning session at 56,663.85 as investors welcomed the ruling Liberal Democratic Party’s landslide election victory. (EPA Images pic)</figcaption></figure>
SYDNEY: Asian markets jumped on Monday as a resounding win for Japanese Prime Minister Sanae Takaichi whetted appetites for more reflationary policies, while there was widespread investor relief at a last-gasp rebound in US chip stocks.
Bargain hunting in beaten-down momentum plays including silver also helped shore up sentiment, as did wagers of more policy easing from the US Federal Reserve.
A rate cut by June is now seen as an odds-on bet, with a slew of economic data this week on jobs, inflation and spending expected to reinforce the case for stimulus.
A Bloomberg News report, citing unnamed sources, that China had urged banks to curb US Treasury exposure weighed a little further on the dollar and pushed Treasury yields a tad higher.
In stocks, Japan&#8217;s Nikkei headlined the gains with a rise of 3.9%, hitting all-time highs as the government&#8217;s decisive majority clears the way for more spending and tax cuts.
&#8220;The victory gives Takaichi a stable majority, enabling decisive action on fiscal stimulus, AI, semiconductors, energy security, and strategic reforms,&#8221; said Marc Jocum, a senior investment strategist at Global X ETFs Australia.
&#8220;Japan was long seen as a contrarian investment, but is now a reform story with meaningful momentum,&#8221; he added. &#8220;Political stability, improving returns on capital, domestic capital deployment and reasonable valuations all point in the same direction.&#8221;
The prospect of more borrowing, however, pushed two-year Japanese government bond yields up to their highest since 1996 at 1.3%.
MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan rose 2.4%, while South Korea&#8217;s tech-heavy index climbed 4.1%.
Chinese blue chips rose 1.6%, ahead of inflation figures due on Wednesday that are expected to show a pullback in food prices and continued deflation in producer prices.
As for Europe, EUROSTOXX 50 futures firmed 0.3%, as did DAX futures, while FTSE futures rose 0.4%.
S&amp;P 500 futures and Nasdaq futures added 0.1%, having both bounced more than 2% on Friday to break a run of heavy losses.
Concerns remained about whether the truly massive amounts being spent on AI will ever make a return, and which companies will ultimately benefit or fail. The four largest US tech giants alone plan to spend US$650 billion on capex this year.
&#8220;Investors are sensibly rotating from AI spenders to beneficiaries, services to manufacturing, US exceptionalism to global rebalancing,&#8221; wrote analysts at BofA in a note. &#8220;We are long Main St, short Wall St.&#8221;
US data to test Fed wagers
To sustain the rally, US data this week would need to be benign enough to keep rate cuts alive, but not so weak as to threaten consumer demand and earnings.
Payrolls are forecast to rise 70,000 in January, to leave the unemployment rate at 4.4%, though payroll growth over 2025 is also expected to be revised down quite sharply.
Retail sales are seen up a moderate 0.4%, while headline and core consumer price inflation is forecast to slow a little to 2.5% in January.
Any downside misses would tend to pull Treasury yields and the dollar lower, though the yen and pound have plenty of troubles of their own.
Investors have already sold the yen in anticipation of Takaichi&#8217;s debt-funded expansionary policies, and the initial reaction was to take profits, pulling the dollar down 0.5% to 156.46, some way from the recent peak at 159.45. Analysts assume a push toward 160.00 would likely draw threats of intervention from Tokyo.
The euro was a shade firmer at US$1.1853, having held to a tight range for the past week. Sterling was stuck at US$1.3619, still plagued by political uncertainty amid speculation UK Prime Minister Keir Starmer could lose his job.
Starmer&#8217;s chief of staff, Morgan McSweeney, quit on Sunday, saying he took responsibility for advising Starmer to name Peter Mandelson as ambassador to the US despite his known links to Jeffrey Epstein.
&#8220;Should Starmer be replaced, gilt yields initially rise and the pound weakens,&#8221; said Ruth Gregory, deputy chief UK economist at Capital Economics.
&#8220;The most likely longer-lasting influence is a loosening in fiscal policy that leads to higher gilt yields than otherwise and a weaker pound than otherwise.&#8221;
In commodity markets, silver added 5% to US$82, after swinging wildly from a 15% loss to a 9% closing gain on Friday. The metal had plunged in the last two weeks as leveraged positions were caught in a vicious squeeze triggering margin calls and forced selling.
Gold was up 1.4% at US$5,030 an ounce, having been as low as US$4,403 at one stage last week.
Oil prices continued to gyrate as markets waited on the outcome of talks between the US and Iran, which have so far failed to reduce the risk of a military conflict between the two countries.
Brent dropped 1.1% to US$67.32 a barrel, while US crude fell 1.1% to US$62.86 per barrel.

MatchPoint Times

Asian stocks rally as Nikkei jumps, chip sector rebounds

A resounding win for Japanese Prime Minister Sanae Takaichi whetted appetites for more reflationary policies.

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