Equities extended their rally to fresh all-time highs as confidence returned to U.S. technology stocks, easing pressure after recent concerns over heavy artificial intelligence spending. Asian markets led gains, with the MSCI Asia Pacific Index rising 1.1%, helping push the MSCI All Country World Index to a new record. Japanese equities outperformed after Prime Minister Sanae Takaichi secured a decisive election victory, delivering a strong mandate for pro-growth, pro-defence, and expansionary fiscal policies. U.S. and European equity futures softened slightly after the S&P 500 closed near record levels.
The improvement in sentiment reflects easing anxiety around the AI trade, which had driven sharp volatility over the past two weeks. Investors appear more comfortable that excess froth has been cleared, leaving positioning healthier ahead of a heavy run of U.S. economic data. Attention now turns to employment and inflation figures later this week, which are expected to shape expectations around the Federal Reserve’s rate path. While policy is widely expected to remain on hold in the near term, a stabilising labour market and moderating price pressures are keeping longer-term easing expectations alive.
In FX, the yuan strengthened to its firmest level since mid-2023 after reports that China asked banks to limit U.S. Treasury holdings, reinforcing diversification away from the dollar. USD/JPY moved lower following Japan’s election result, with markets reassessing fiscal and inflation risks. Elsewhere, Bitcoin extended losses as risk appetite rotated back toward equities, while precious metals pulled back modestly after a strong run. Bond yields edged lower as traders positioned ahead of key data releases.
• S&P 500 futures −0.1%
• Nasdaq 100 futures −0.2%
• Bitcoin −2.3% to 68,765
• Gold −0.7% to 5,023
• WTI crude unchanged at ~60.80
