Asian Shares Post Small Gain, Yen Weakens Past 159: Markets Wrap

Asian shares posted a modest gain at the open, while Japanese equities extended their record-breaking run fueled by a weaker yen.

The Nikkei 225 Stock Average advanced 0.9%, with the Japanese currency slipping past the 159-per-dollar level to the weakest since July 2024. Stocks in the country have jumped and the currency fallen amid reports of a snap election. Shares in South Korea edged up, having posted a gain on every trading day of 2026.

In Tuesday’s US session, the S&P 500 fell from an all-time high, as JPMorgan Chase & Co. led a slide in lenders after its investment-banking fees missed guidance. US benchmarks dropped after December inflation data did little to dent expectations that the Federal Reserve will pause interest-rate cuts.

Traders are going into Wednesday awaiting a possible US Supreme Court ruling on President Donald Trump’s global tariffs that were announced in April.

Meanwhile, the cooler-than-expected US consumer price index reading reinforced bond traders’ expectations that the Fed will wait until mid-year to cut rates. Even after Fed Chair Jerome Powell and his board lowered the benchmark three times last year, money markets have continued to project the next reduction only in mid-2026.

“The initial excitement sparked by a cooler-than-anticipated core CPI was short-lived,” said Jose Torres at Interactive Brokers. “The reversal was influenced, in part, by the report’s failure to pull forward the next expected rate reduction from June to April, as fixed-income watchers project Powell’s December cut will be his last at the helm.”

Following JPMorgan’s results Tuesday, earnings from megabank rivals Bank of America Corp., Wells Fargo & Co., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley are slated for Wednesday and Thursday. The group is expected to post its second-highest annual profit ever, boosted by Trump’s policy changes.

Traders also are mindful of the potential for a US Supreme Court ruling Wednesday on tariffs the White House has been enforcing. An adverse ruling could draw a negative market reaction, even as the administration has alternative legal avenues for most of the levies.

Elsewhere, Brent crude notched its biggest four-day gain since June as Trump ramped up rhetoric on Iran, while silver also extended its recent rally to cap its best three-day streak on record.

What Bloomberg Strategists say...

USD/JPY looks likely to climb above 160 and keep going higher. Prime Minister Sanae Takaichi’s reported plan for a snap election was the main initial driver, and now a more hawkish Fed stance on US interest rates and the Iran-fueled increase in oil prices threaten Japan’s currency with a triple whammy.

— Garfield Reynolds, MLIV Asia Team Leader. Click here for the full analysis.

Attention in Asia will once again be on Japan, where Prime Minister Sanae Takaichi’s reported plan for a snap election fueled a rally in stocks while pushing down bonds and driving the yen deeper into the intervention-risk zone. Japanese five-year yields rose to 1.615%, the highest since the tenor’s 2000 debut.

Success at the polls for Takaichi, who ascended to the premiership in October, would provide a mandate for her to continue hawkish diplomacy and pro-stimulus policies.

Back to the US inflation data, the December core CPI, excluding the often volatile food and energy categories, increased 0.2% from November. On an annual basis, it advanced 2.6%, matching a four-year low.

The reading is perhaps a more convincing sign that inflation is on a downward path, since a number of caveats in November’s report contributed to a significant pullback in the annual core CPI.

“Given the quirks of November’s dual-month report, it’s surprising not to see more numerous large month-over-month readjustments,” said Stephen Kates at Bankrate.

“Consumers can breathe a sigh of relief that we didn’t snap back to the 3% annual inflation rate. Although today’s reading doesn’t demonstrate additional progress for inflation, it doesn’t take a step backwards either.”

Stocks

• S&P 500 futures were little changed as of 9:27 a.m. Tokyo time

• Hang Seng futures rose 0.2%

• Japan’s Topix rose 0.5%

• Australia’s S&P/ASX 200 was little changed

• Euro Stoxx 50 futures rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1640

• The Japanese yen was little changed at 159.17 per dollar

• The offshore yuan was little changed at 6.9747 per dollar

Cryptocurrencies

• Bitcoin rose 1.5% to $95,459.32

• Ether rose 3.7% to $3,327.5

Bonds

• The yield on 10-year Treasuries was little changed at 4.18%

• Japan’s 10-year yield advanced two basis points to 2.180%

• Australia’s 10-year yield advanced three basis points to 4.74%

Commodities

• West Texas Intermediate crude was little changed

• Spot gold rose 0.5% to $4,607.42 an ounce