Asian share markets experienced a strong upward move on Tuesday. Japanese stocks led the charge with a powerful rally. Investors showed clear confidence in technology and artificial intelligence sectors, fueling growth expectations across the region.
Japanese Nikkei Soars to New Heights
Japan's Nikkei index surged impressively after reopening from a holiday. It jumped 3.4 percent, reaching record highs. A weaker yen and hopes for fiscal stimulus boosted market sentiment significantly. This positive momentum from Japan helped lift other regional markets higher.
South Korean and Taiwanese stocks also touched all-time peaks during the session. Chinese blue-chip shares climbed to their highest level in four years. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.8 percent, setting a fresh record.
European Markets Show Modest Gains
In Europe, market indicators pointed to cautious optimism. EUROSTOXX 50 futures gained 0.2 percent. Germany's DAX futures added 0.1 percent. FTSE futures remained flat, according to Reuters data.
Analysts highlighted that enthusiasm around artificial intelligence continues to support global equities. Citi analysts expressed confidence in further gains. They see global equities continuing to climb through 2026, targeting around 10 percent upside for the MSCI AC World by year-end. However, they cautioned that high valuations leave little room for disappointment if earnings fall short.
US Markets Await Key Data
US stock futures edged lower ahead of important inflation data. S&P 500 futures declined 0.2 percent. Nasdaq futures dropped 0.3 percent. Markets are closely awaiting the December US consumer price index release.
Forecasts point to core inflation rising to 2.7 percent. Some analysts expect a higher reading of 2.8 percent. The US earnings season also begins this week. Major banks including JPMorgan Chase, Citigroup and Bank of America are due to report their financial results.
Bank executives are expected to face tough questions. President Donald Trump has called for a one-year cap on credit card interest rates at 10 percent starting January 20. Banks have warned that such a move could restrict access to credit for millions of households and small businesses.
Gold Shines as Uncertainty Grows
Investors expressed concern about how the US Justice Department's criminal investigation into Federal Reserve Chair Jerome Powell could affect markets. Analysts fear the Fed may be pushed to keep interest rates too low for too long. This could increase the risk of higher inflation later.
The uncertainty weighed heavily on the dollar. The dollar index remained stuck near 98.88 after falling over 0.25 percent overnight. The euro edged up to $1.1665. The dollar slipped against the Swiss franc. Against the yen, the dollar steadied at 158.40, even as Japan's currency hovered near multi-year lows.
Japan's finance minister Satsuki Katayama said she raised concerns about the yen's one-sided weakness with US Treasury Secretary Scott Bessent.
Safe Haven Assets Gain Appeal
Gold rose as investors sought safety amid uncertainty. It climbed above $4,600 an ounce for the first time before falling slightly. Christopher Louney, a gold strategist at RBC Capital Markets, explained gold's appeal.
"Gold serves as a catch-all, and a default hedge of last resort for fear and uncertainty," Louney said. "This stems from its reputation as a safe haven and store of value, the fact that it is non-debaseable, and is no one else's liability." Louney added that prices could rise as high as $5,200 by the end of the year.
Oil Prices Reach Seven-Week Highs
Oil prices also climbed during the session. They reached seven-week highs on concerns that unrest in Iran could disrupt supplies. Brent crude rose 0.5 percent to $64.19 a barrel. US crude gained 0.5 percent to $59.81.
Adding to market tensions, President Trump warned that any country doing business with Iran would face a 25 percent tariff on its trade with the United States. This development created additional uncertainty in global markets.
The combination of strong Asian market performance and safe haven demand created a complex trading environment. Investors balanced optimism about technology growth with concerns about monetary policy independence and geopolitical risks.
