Global financial markets kicked off the week with sharp gains, driven by a combination of political change in Japan and fiscal uncertainty in the United States. Investor sentiment swung rapidly from risk assets to safe havens, pushing Japanese stocks and gold to fresh record highs.
Japan Makes History as Nikkei Soars to Record Levels
The Nikkei 225 index hit an all-time high after Sanae Takaichi was elected leader of Japan’s ruling party. Takaichi’s victory paves the way for her to become Japan’s first female prime minister — a development seen by markets as a signal of potential aggressive fiscal stimulus to strengthen the domestic economy.
Market optimism spurred strong capital inflows into Japanese equities, while the yen plunged sharply — breaching ¥150 against the U.S. dollar and ¥176 against the euro. The yen’s weakness reinforced expectations that the Bank of Japan (BOJ) will delay interest rate hikes. Market-implied odds of a BOJ rate increase this year plunged from around 68% to 41%, reflecting a growing view that the ultra-loose monetary stance will remain intact.
Gold Shines as the Safe Haven of Choice
Amid growing global concerns over a possible U.S. government shutdown, investors flocked to safe-haven assets. Spot gold prices surged to a record high of US$3,944 per ounce, while demand for digital assets also climbed as an alternative hedge amid fiscal uncertainty.
Analysts expect the rally to continue if political deadlock in Washington persists. “Investors are seeking stable shelters — and this time, gold and bitcoin are emerging as the top choices,” said a Tokyo-based market analyst quoted by Reuters.
Oil Rebounds on OPEC+ Decision
Crude oil prices also strengthened moderately after OPEC+ announced a smaller-than-expected production increase of just 137,000 barrels per day. The decision raised concerns over medium-term supply, pushing Brent crude up about 1.3% to US$65.36, while WTI held firm at US$61.69 per barrel.
Global Markets Remain Cautious
Most other Asian exchanges — including China, South Korea, and Taiwan — remained closed for national holidays. However, S&P 500 futures in the U.S. rose around 0.3%, signaling potential further gains on Wall Street. On the currency front, the U.S. dollar remained strong, while the euro and British pound edged down about 0.2%.
Market Outlook
Overall, global markets are moving in two contrasting directions — balancing optimism over Japan’s political stability with concerns about U.S. fiscal uncertainty. With volatility rising, traders are closely watching the next moves from major central banks and potential policy signals from Washington that could shape the market’s next phase.
Ade Yunus
Global Market Strategies