After a political shift in Japan, stocks across Asian shares have seen unprecedented increases as gold rallies to an all-time high.
Asian capital markets started the week off exceptionally well, building off the gains of the past week to reach all-time historic highs driven by the stellar rally in Japan’s equity market. The MSCI Asia-Pacific Index reached its highest ever level, with solid contributions from Tokyo, Seoul, Hong Kong and Sydney.
The extraordinary move was driven by Japan’s Nikkei 225 composite index which added over 5% in one trading session and, again, broke all-time records. Investor excitement was fueled by the political victory of Sanae Takaichi, the newly elected head of Japan’s ruling Liberal Democratic Party (LDP).
Takaichi has a pro-stimulus economic history, and her confirmation of the LDP party line reassured traders across the world that Japan would likely continue its expansionary fiscal policy position and egalitarian monetary policies to help support growth.
Asian shares: Gold Reaches Record High Above $3,900
Despite the equity bull run, the price of gold exceeded $3,900 per ounce, reaching an all-time record high. This gold rise is attributed to persistent safe-haven demand as investors hedge their portfolios in the face of global uncertainty including geopolitical issues and worries about the US government’s fiscal position.
Several factors supported the gold rally:
Finally, central bank buying, particularly in emerging markets, took another leg higher for gold prices.
Expectations of additional interest-rate cuts by the US Federal Reserve made gold (a non-yielding asset) more appealing.The US dollar declined, reducing the cost of gold for foreign buyers.
Geopolitical uncertainty, such as trade disputes and regional conflicts, attracted investors seeking safe-haven assets. Seasonal demand in Asian shares, specifically with festivals in India and China, traditionally resulted in more gold purchases.
Asian shares watchers expect a renewed focus on public spending, infrastructure projects, and corporate tax incentives to sustain Japan’s economic recovery well into 2026. Takaichi’s leadership and the Bank of Japan’s long-held ultra.
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Author: Team BTP
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