Asian stocks rise, led by Japanese shares

MSCI’s broadest index of Asia-Pacific shares was up 0.2% to hover just below a record high hit on Tuesday

Asian stocks rose on Wednesday, buoyed by Japanese shares, as investors braced for a snap election in Japan that could lead to more fiscal stimulus.

The yen hit its weakest level since July 2024 at 159.415 per ‌dollar in early Asian hours, as the threat of a market intervention resurfaced. Media reported that Prime Minister Sanae Takaichi was considering calling a snap lower house election on February 8.

The frail yen and the prospect of more stimulus sent the Nikkei up more than 1% to a record and pushed Japanese government bonds lower, a so-called “Takaichi trade” that appears to have been turbocharged this week as investors worry about the country’s fiscal health.

Masahiko Loo, senior fixed income strategist at State Street Investment Management, said ⁠the market moves reflected expectations of fiscal easing, though ‌they may be overstated given political constraints as Takaichi’s coalition would need the opposition’s support in the upper house to pass legislation.

Any sharp and decisive break beyond 161 level for yen could trigger renewed intervention to curb excessive volatility, Loo said. In that scenario, ‍expectations for a Bank of Japan rate hike may shift forward to April, potentially serving as an inflection point for currency dynamics.

MSCI’s broadest index of Asia-Pacific shares was up 0.2% to hover just below a record high hit on Tuesday.

Chinese stocks added 0.7% in early trade, just below a 10-year high that was hit on ‌Tuesday.

In other markets, U.S. stocks closed lower amid a decline in financial shares after comments from JPMorgan executives added to worries about ​Trump’s recent proposal for a cap on credit card rates.