The rally in global equities extended into Asia as investors broadened exposure beyond U.S. markets, drawn by cheaper valuations and stronger growth prospects. The MSCI Asia Pacific Index rose 0.9% to a record, helping push the MSCI All Country World Index to a fresh all-time high, while European futures pointed higher. U.S. futures were slightly softer after the S&P 500 closed at a record. Treasuries edged lower, with the 10-year yield rising to 4.19%. Brent crude touched its highest level since November on renewed Iran-related tariff risks, and the dollar recovered some recent losses.
Japan was a key driver of regional moves, with equities jumping and bond yields surging amid speculation Prime Minister Sanae Takaichi may call a snap election. The move fuelled the “Takaichi trade,” with defence and nuclear stocks outperforming, bonds selling off, and USD/JPY weakening to its lowest level since mid-2024. Political uncertainty raised concerns around higher fiscal spending and faster inflation, keeping pressure on the yen even as intervention risk capped further losses.
Looking ahead, the equity rally faces near-term tests from U.S. inflation data and a possible Supreme Court ruling on Trump’s tariffs. Investors are also increasingly focused on political pressure on the Federal Reserve, which has added to unease around U.S. assets and reinforced interest in regional diversification. Valuations remain a key part of the story, with Asian equities trading well below U.S. multiples despite the strong recent run, supporting the case for continued rotation into non-U.S. markets.
- S&P 500 futures: little changed
- Nasdaq 100 futures: -0.1%
- Bitcoin: +1.3% to ~92,120
- Gold: -0.3% to ~$4,583/oz
- WTI crude: +0.8% to ~$59.95/bbl
