ASIAN SHARES TRACK WALL STREET HIGHER; YEN WEAK AHEAD OF JAPAN VOTE
Asian stock markets advanced on Thursday, mirroring gains on Wall Street, as investor sentiment improved amid easing fears over U.S. inflation and optimism surrounding corporate earnings. However, the Japanese yen remained under pressure, weakening further against the U.S. dollar, as investors braced for a key national election in Japan that could influence the country’s economic direction.
Markets across the Asia-Pacific region followed the positive momentum from the United States, where the S&P 500 and Nasdaq both hit record highs, buoyed by strong tech earnings and signs that the Federal Reserve may be nearing the end of its interest rate tightening cycle. The Dow Jones Industrial Average also climbed, adding to the bullish mood.
Japan’s benchmark Nikkei 225 surged 1.3%, hitting fresh 34-year highs as foreign investors continued to pour into the market. Investors remain optimistic about Japanese corporate reforms, solid earnings, and the country’s stable inflation environment. However, the Japanese yen traded at a six-week low, hovering near 159.5 per dollar, weighed down by expectations that the Bank of Japan will maintain its ultra-loose monetary policy despite global tightening.
The yen’s decline has raised concerns domestically, as a weaker currency increases import costs and squeezes household spending. Yet for Japan’s large exporters, like Toyota and Sony, a cheaper yen boosts overseas profits, helping support equity prices.
The currency market’s focus has also shifted toward the upcoming Japanese general election, scheduled for later this week. Prime Minister Fumio Kishida’s ruling Liberal Democratic Party (LDP) is seeking to strengthen its mandate, but faces challenges amid voter concerns over inflation, wage growth, and the government’s response to demographic decline.
Political analysts say the vote could shape fiscal priorities in Asia’s second-largest economy, particularly regarding stimulus spending, energy policy, and defense. A decisive victory for the LDP may pave the way for broader structural reforms, including a potential reconfiguration of the Bank of Japan’s leadership and policy direction.
Elsewhere in Asia, South Korea’s KOSPI rose 0.9%, lifted by semiconductor and auto stocks. Tech giant Samsung Electronics extended its rally following better-than-expected quarterly guidance. Australia’s S&P/ASX 200 also edged up 0.6%, supported by mining and financial shares, while Hong Kong’s Hang Seng Index added 1.1% as Chinese tech stocks rebounded from recent losses.
Meanwhile, Chinese mainland markets saw modest gains. The Shanghai Composite Index rose 0.4%, helped by speculation that Beijing may soon announce further stimulus measures to support a faltering post-COVID recovery. Investors are awaiting key data on GDP and retail sales later this month for clearer signals on the economic outlook.
In commodities, oil prices steadied after recent volatility, with Brent crude holding around $84 per barrel, while gold prices eased slightly on profit-taking. U.S. Treasury yields remained largely unchanged, with investors watching for comments from Federal Reserve officials later in the week.