Asia Stocks Rise as Nikkei Hits Record High, Dollar Weakens

Asian equity markets climbed for a second straight session on Tuesday, led by a sharp rally in Japan as the Nikkei 225 surged to a fresh all-time high, while the U.S. dollar weakened amid growing expectations of softer U.S. economic data.

Japan’s benchmark Nikkei jumped nearly 3%, extending gains after Prime Minister Sanae Takaichi secured a decisive election victory over the weekend. The rally was accompanied by a strengthening yen, reflecting renewed investor confidence in Japanese assets.

Across the region, MSCI Asia-Pacific ex-Japan Index rose about 0.7%, signaling broad-based optimism despite mixed global cues.

Wall Street momentum cools

U.S. equity futures edged lower after a two-day rally on Wall Street showed signs of fatigue. S&P 500 e-mini futures slipped around 0.1%, partially retracing overnight gains. On Monday, the S&P 500 rose 0.5%, while the Nasdaq Composite advanced 0.9%, driven by a rebound in technology stocks following last week’s AI-led selloff.

Market participants remain cautiously optimistic. Analysts say rising corporate investment, particularly in artificial intelligence supply chains, continues to support economic activity across both developed and emerging markets.

Dollar softens, yen strengthens

In currency markets, the U.S. dollar extended losses against major peers. The dollar slipped about 0.4% against the yen, trading near 155 per dollar, while the U.S. Dollar Index fell 0.2%, hovering close to its lowest level this month.

The dollar’s weakness followed reports that Chinese regulators advised financial institutions to reduce exposure to U.S. Treasuries, citing concentration and volatility risks. Meanwhile, U.S. Treasury officials confirmed renewed engagement with Beijing aimed at stabilizing financial dialogue.

Economic data in focus

Investor attention is now firmly on upcoming U.S. economic releases, including delayed payrolls data. White House officials indicated that job growth could moderate in coming months as immigration policies tighten and productivity gains from AI adoption accelerate.

Bond markets reflected the cautious tone, with the yield on the U.S. 10-year Treasury holding steady near 4.18%. Futures markets continue to price in a low probability of a near-term rate cut by the Federal Reserve, with expectations leaning toward policy easing only later in the year.

Commodities and crypto retreat

In commodities, Brent crude oil slipped slightly to around $69 a barrel, while gold and silver saw sharper declines. Cryptocurrencies also traded lower, with Bitcoin and Ethereum both under pressure amid broader risk reassessment.

With Asian equities buoyed by Japan’s strength but global markets facing mixed signals, investors appear selective, balancing regional optimism against macroeconomic uncertainty.