Asian stocks continued their two-day rally, following positive momentum from Wall Street that fueled a global rally. The MSCI Asia Pacific Index rose 0.3% on Tuesday morning after global stock indexes hit record closing highs. In Japan, the Topix index rose 0.5%, while US index futures edged higher.

This rise was fueled by optimism about a year-end rally that is expected to strengthen. The S&P 500 erased December's losses and is on track for its eighth consecutive month of gains, which would be its longest winning streak since 2018. Large stocks like Tesla and Nvidia led the gains, bolstering market sentiment.

According to Mark Hackett of Nationwide, "All factors point to a rousing end to the year." The current positive sentiment is driven by stimulus optimism, technical factors, and positive market outlooks, all of which are helping to fuel strong market movements heading into the end of the year and early 2026.

However, these risk movements are also impacting the US bond market. Treasuries sold off across the curve on Monday, with 2-year and 10-year yields rising by about two basis points. Traders are now placing options on Treasuries, targeting a bond rally that would push the 10-year yield back to 4% in the coming weeks.

Meanwhile, the focus in Asia remains on the yen. The yen strengthened after Japanese Finance Minister Satsuki Katayama stated that Japan has full freedom to take bold action against currency movements that are inconsistent with fundamentals. This statement served as a stern warning to speculators after the yen weakened despite the Bank of Japan's recent interest rate hike.

Meanwhile, China Vanke Co. shares received final support from lenders to extend the grace period for its bonds, averting a potential default. However, Chinese stocks remain under scrutiny following a Citigroup downgrade.

Overall, the US dollar weakened again after falling 0.4% on Monday, with gold and silver prices hitting new records. West Texas Intermediate (WTI) declined after gaining more than 2% earlier, as the US blockade of Venezuela intensified. With the global economy showing positive signs, many investors are wondering whether this momentum will continue into 2026. (asd)

Source: Bloomberg.com