Asian stocks inch higher as fragile yen raises intervention worries

Asian stocks rose modestly, led by Japanese shares, as a weak yen—at its weakest since July 2024—revived concerns about possible market intervention and the prospect of fiscal stimulus after a reported snap election; gold and silver also hit record highs amid geopolitical tensions.

Asian markets opened slightly higher on Wednesday, supported by gains in Japanese shares. The yen weakened to its weakest level since July 2024, bringing intervention concerns back into focus. Local media reported Prime Minister Sanae Takaichi may call a snap election on February 8, which investors see as potentially increasing the chance of fiscal stimulus. Geopolitical tensions and safe-haven demand pushed gold and silver to record levels. Key details: - MSCI's broadest Asia-Pacific index was up about 0.2% and sat just below a record peak reached the previous day. - The yen fell to around 159.415 per dollar, its weakest since July 2024, prompting renewed talk of possible market intervention. - Local media reported Prime Minister Sanae Takaichi was considering a snap election on February 8, a development markets say could influence fiscal policy expectations. - The Nikkei rose more than 1% to a record and Japanese government bonds fell amid what market participants described as a "Takaichi trade." - Gold rose about 0.6% to $4,613.93 per ounce and silver jumped more than 2%, both reaching record highs. - U.S. data showed moderate underlying inflation pressures, leaving rate cuts a possibility later in the year while the Fed is widely expected to hold rates in the near term. Summary: The market moves reflect expectations that a weaker yen and the possibility of fiscal easing in Japan are affecting equities, bond yields and currency flows. Strategists noted that a clear break beyond roughly 161 yen per dollar could trigger renewed intervention and could shift timing expectations for Bank of Japan policy moves. Undetermined at this time.