Tokyo stocks hit new record as markets extend global rally
A man walks past a stock quotation board showing the Nikkei share average outside a brokerage in Tokyo, Japan, on Jun 23, 2025. (File photo: Reuters/Kim Kyung-Hoon)
HONG KONG: Japanese stocks eked out another record on Tuesday (Oct 7), building on the previous day's surge following the election of a pro-stimulus advocate to lead the country's ruling party, while gold also pushed to a new high amid the United States government shutdown and French political upheaval.
The election of Sanae Takaichi, who is expected to become Japan's prime minister this month, came as a surprise but ramped up optimism that she will embark on a campaign on monetary easing.
That sent the Nikkei 225 soaring almost 5 per cent on Monday and hammered the yen as investors began questioning the likelihood that the Bank of Japan will continue its interest rate hikes.
And the index continued its run-up on Tuesday, though it pared its earlier gains to end marginally higher. The yen also held losses.
Takaichi's victory "removes uncertainty about the country's policy direction", said Saxo Markets' Charu Chanana. "Her agenda is expected to continue a blend of fiscal support and ultra-easy monetary policy.
"For investors, that continuity means no abrupt tightening and ongoing coordination between the government and the Bank of Japan."
Yields on 30-year Japanese bonds hit their highest level, reflecting fears the country's already colossal debt will balloon further.
Adding to the buying sentiment was an announcement by Advanced Micro Devices and OpenAI of a partnership to develop AI data centres. The deal comes after OpenAI and US powerhouse Nvidia signed a contract for more than US$100 billion in equipment.
And this week, OpenAI struck deals with South Korean semiconductor giants Samsung and SK hynix for chips and other equipment that will be used in its Stargate project.
Tech led gains, having been at the forefront of a global advance this year that has seen several markets hit record highs.
While there are growing worries that huge investments in AI by firms have gone too far, OpenAI's Fidji Simo told AFP she did not consider it a bubble.
"What I am seeing here is a massive investment in computing power, (with) us meeting (this need) for computing power so incredibly badly for a lot of use cases that people want," said Simo, chief operating officer of OpenAI's applications, including its flagship model ChatGPT.
"From that perspective, I really do not see that as a bubble. I see that as a new normal, and I think the world is going to really switch to realising that computing power is the most strategic resource."
Most other markets rose, with Singapore, Wellington, Mumbai, Bangkok, Taipei, Manila and Jakarta all up with London and Frankfurt.
Hong Kong, Shanghai and Seoul were closed for holidays.
Paris fell for a second day while the euro held losses as Sebastien Lecornu, who resigned as prime minister on Monday after three weeks in the post, began trying to get cross-party support for a cabinet lineup to pull his country out of political deadlock.
He stood down just 14 hours after naming a cabinet that immediately drew criticism for containing many of the same faces from the previous government that had faced a backlash over a controversial austerity budget.
But President Emmanuel Macron called on him later Monday to reach a plan for the country's "stability".
The broad gains followed new records for the S&P 500 and Nasdaq in New York.
Gold hit a fresh peak of US$3,977.44 - pushing closer to the US$4,000 mark - as investors eye the US government shutdown, with Republicans and Democrats appearing no closer to an agreement.
Bets on the Federal Reserve cutting interest rates this month and a political crisis are adding to the allure of the precious metal, which is a go-to asset in times of uncertainty and turmoil.
"Democrats are refusing to provide the votes the ruling Republicans need to reopen federal departments unless an agreement is reached on extending expiring Obamacare healthcare subsidies," National Australia Bank's Rodrigo Catril wrote.
"Meanwhile Republican House Speaker Mike Johnson told his members not even to report to Congress unless the Democrats cave, insisting any healthcare negotiation be held after re-opening the government.
"Analysts expect the shutdown could last a few weeks before some agreement is reached."
The upbeat mood on equity markets was reflected in the crypto sphere, with bitcoin hitting a record high of US$126,251.
