Asia-Pacific markets opened higher on Tuesday, led by Japan’s Nikkei 225, which surged to a fresh record high as investors continued to embrace the so-called “Takaichi trade” following Prime Minister Sanae Takaichi’s landslide Lower House victory.
The upbeat regional tone also reflected renewed risk appetite on Wall Street overnight, where investors rotated back into major technology stocks.
By 11:30 am AEDT (12:30 am GMT), Australia’s S&P/ASX 200 was trading 0.4% higher. Japan’s Nikkei 225 climbed 1.6% to post a new all-time high, while South Korea’s KOSPI 200 advanced 0.6%.
In Australia, fresh data showed consumer sentiment weakened in February following the Reserve Bank of Australia’s recent decision to lift interest rates. The Westpac–Melbourne Institute Consumer Sentiment Index fell 2.6% to 90.5 from 92.9 in January.
Matthew Hassan, Head of Australian Macro-Forecasting at Westpac, noted:
"Previous surveys showed a significant weakening in sentiment as a lift in inflation stoked fears that the RBA was about to raise interest rates. Those fears were realised in February.
"The RBA’s 25bp hike – the first in over two years – has put renewed pressure on finances, dented attitudes towards major purchases and raised concerns about medium-term prospects for the economy.
"That said, the impact on sentiment overall has been relatively mild. The 2.6% decline this month compares to an average 3.8% fall following cash rate rises historically. At 90.5, the Index level is also still well above the extreme lows sustained through most of 2022–2024."
Hassan added that households are preparing for further tightening:
"Consumers are bracing for more rate rises to come. Indeed, interest rate expectations have risen further and now sit near previous highs. The Westpac–Melbourne Institute Mortgage Rate Expectations Index, which tracks consumer expectations for variable mortgage rates over the next 12 months, surged 16.1% in February.
"At 177.5, the index is now at its highest level since June 2023 – near the tail-end of the previous tightening cycle when underlying inflation was running at 6.5%yr.
"Remarkably, over 80% of consumers now expect mortgage rates to rise over the next 12 months with just over a third expecting them to go up by a full percentage point or more."
Overnight in the United States, major benchmarks closed higher. The Dow Jones Industrial Average edged up 0.04% to a fresh record close, while the S&P 500 gained 0.5% and the Nasdaq Composite rose 0.9%, led by strength in large-cap technology stocks.
Commodity markets were also firmer. Brent crude settled 1.5% higher at US$69.04 per barrel, while spot gold advanced 1.9% to US$5,057.78 per ounce.
Elsewhere in Asia on Monday, mainland Chinese equities posted solid gains, with the Shanghai Composite rising 1.4% to 4,123.1 and the CSI 300 climbing 1.6% to 4,719.1.
Hong Kong’s Hang Seng Index added 1.8% to 27,027.2, while India’s BSE Sensex increased 0.6% to 84,065.8.
European markets also ended the previous session in positive territory. The UK’s FTSE 100 rose 0.2% to 10,386.2, Germany’s DAX advanced 1.2% to 25,014.9, and France’s CAC 40 gained 0.6% to 8,323.3.
