SINGAPORE, Jan 14 — Asian stocks rose to a record high today, buoyed by Japanese shares, as investors braced for a possible election in Japan that could lead to more stimulus, while worries about central bank independence and benign US inflation data jolted currencies.

Rising geopolitical tensions helped propel silver above US$90 (about RM365) per ounce for the first time, with the metal surging 27 per cent in the first nine trading days of the year.

Gold prices also climbed to yet another record high after a stellar 2025. Oil prices wobbled after rising as US President Donald Trump urged Iranians to keep protesting, saying help is on the way. Iran in turn accused Trump of encouraging political destabilisation and inciting violence.

The Japanese yen fell to its weakest level since July 2024 and was last at 159.29 per dollar as the threat of market intervention resurfaced, after local 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 over 1 per cent to a record and pushed Japanese government bonds lower — a so-called “Takaichi trade” that appears to have been turbocharged this week as investors fret about the country’s fiscal health.

Fred Neumann, chief Asia economist at HSBC, said the election outcome could bring forward the next BOJ rate hike, although the central bank was likely to consider financial market volatility, including renewed yen weakness.

“Crucial for the BOJ will be the new government’s fiscal and reform plans, with easier fiscal policies and pro-growth reforms reducing downside risks to growth and inflation,” Neumann said.

“Still, accelerating yen weakness would pose challenges to the BOJ, possibly prompting more hawkish rhetoric.”

China stocks reversed course to trade 0.15 per cent lower after Chinese stock exchanges tightened margin requirements in a surprise move to cool the red-hot equity market. Blue-chip stocks had hit a 10-year high yesterday.

Investors mostly looked past trade data where China reported a record trade surplus of nearly US$1.2 trillion in 2025, led by booming exports to non-US markets.

MSCI’s broadest index of Asia-Pacific shares was up 0.5 per cent, hitting a fresh record high. US stock futures were 0.19 per cent lower while European stock futures were a marginal 0.1 per cent higher, pointing to a subdued open.

Cooling inflation

Data yesterday showed moderate underlying US inflation pressures last month. Economists said this suggested the pass-through of import tariffs to prices was slowing, keeping rate cuts on the table this year, although the broad expectation was for the Fed to hold steady this month.

Traders are pricing in at least two rate cuts this year, with a move not expected until after Jerome Powell ends his term as Fed chairman in May. Matt Simpson, a senior market analyst at StoneX, said US inflation was not slowing sufficiently to move the needle towards imminent rate cuts.

“With lack of enthusiasm for cuts from an economic perspective, the US dollar might enjoy a bit more of a bid before the tide reverts to bearish hands,” Simpson said.

The dollar index, which tracks the greenback’s performance against a basket of currencies including the yen and the euro, was last flat at 99.184 after rising 0.2 per cent in the previous session.

The dollar was knocked back at the start of the week as investors worried about Fed independence under Trump after the US Department of Justice threatened to indict Powell in connection with a building renovation project. That led to a sharp rebuke from Powell and former Fed chiefs.

Global central bank officials later yesterday issued a coordinated statement of support for him.

Steve Lawrence, chief investment officer of Balfour Capital Group, said markets appeared to view this episode as largely political rather than a substantive institutional threat.

“Powell’s characterisation of any threat of indictment as intimidation reinforces that interpretation, signalling institutional defence rather than escalation,” Lawrence said. “From a market perspective, this suggests existing guardrails around the Fed are still seen as intact.”

In commodities, gold rose over 1 per cent to US$4,639.42 per ounce and silver surged nearly 5 per cent to over US$90 per ounce — hitting fresh record highs today. — Reuters