Asia Rallies on US Tech Rebound, Takaichi Trade Powers Japan

GLOBAL MOOD: Risk-on
Drivers:  US tech rebound, Japan political boost, US data focus

Asian markets opened firmly in risk-on mode on Tuesday, taking cues from a renewed rebound in US technology stocks after last week’s AI-driven selloff. Japanese equities led the rally, with the Nikkei 225 climbing over 1% to a fresh record, extending the so-called “Takaichi trade” after Prime Minister Sanae Takaichi’s landslide Lower House victory. Gains across South Korea and Australia pushed the MSCI Asia Pacific Index to an all-time high, underscoring improving regional risk appetite.

Sentiment was underpinned by Wall Street’s recovery, where tech heavyweights stabilised and investors stepped back into growth names. However, caution lingered beneath the surface. Chinese regulators quietly urging banks to trim exposure to US Treasuries highlighted rising unease around bond-market volatility, even as the dollar weakened and the yuan strengthened.

Attention now turns to key US data, particularly the delayed January jobs report, retail sales and CPI, which will test the soft-landing narrative and shape expectations that the Federal Reserve remains patient as growth cools and inflation eases.

TODAY’S WATCHLIST
 - US Retail Sales Data
 - AMFI January Data
 - Oct-Dec Earnings: Eicher Motors, Grasim Industries, Oil India, Titan Co

THE BIG STORY
Chinese regulators are quietly telling banks to ease up on US Treasuries, spooked by rising volatility in the bond market. The nudge came as Treasury yields pushed higher, with the 10-year touching around 4.25% and long-end yields also climbing, while the dollar slipped. Officials have asked lenders with heavy exposure to gradually trim positions, without setting hard targets, and the guidance does not apply to China’s state holdings. The move fits a broader global shift, with countries like India and Brazil also cutting US bond exposure. China’s Treasury holdings have already fallen sharply from their 2013 peak.

Data Spotlight
All eyes are on the delayed January jobs report, finally due Wednesday after being pushed back by the partial US government shutdown. The numbers matter even more after ADP showed private payrolls rising by just 22,000 last month, a big miss that rattled confidence. Economists now expect a modest 55,000 gain, pointing to a cooler labour market. White House adviser Kevin Hassett has already flagged that softer job growth could become the norm as population growth slows and productivity improves.

Beyond jobs, investors are lining up inflation and spending data. Friday’s CPI will be watched for confirmation that price pressures are easing, while Tuesday’s retail sales are expected to stay resilient. Together, these releases will help shape expectations around when the Fed might eventually move on rates.

Takeaway
Jobs, inflation and spending data will test the “soft landing” narrative, with the Fed likely staying patient as growth cools but inflation gradually eases.

WHAT HAPPENED OVERNIGHT

• US stocks gained on Monday followed Friday’s rebound after a tech-led selloff earlier in the week, driven mainly by software stocks.
  
  • S&P 500 rose 0.47% for a second straight session; Nasdaq jumped 0.9%.
  • Dow inched up 0.04% to a fresh intraday and closing record above 50,000.
  • Nvidia gained 2.5% and Broadcom rose 3.3%, extending prior-session rallies.
  • Oracle surged 9.6% after an upgrade to buy on optimism around OpenAI spillovers.

• US 10-year Treasury yield slipped about 1 bp to 4.2% in choppy trade.
  
  • Investors await delayed January jobs data on Wednesday and CPI later this week.
  • Markets expect the Fed to keep rates on hold at 3.5%–3.75% next month.

• The Dollar index fell 0.82% to 96.81 on Monday on reports that Chinese regulators advised banks to curb exposure to US Treasuries.
  
  • Onshore yuan strengthened to a 33-month high against the dollar.

• Brent Crude Oil gained 1.5% to $69.04; WTI climbed 1.3% to $64.36.
  
  • US advised flagged vessels to avoid Iranian waters near the Strait of Hormuz.
  • Renewed concerns over US–Iran tensions and potential supply disruptions through a key global oil chokepoint. 

Day’s Ledger

Economic Data

• US Retail Sales Data
• AMFI January Data
• India States bond Auctions

Corporate Actions

• Oct-Dec Earnings: Apollo Hosp, Britannia Ind, Eicher Motors, Grasim Industries, Jubilant Foodworks, Oil India, Samvardhana Motherson, Titan Co, Torrent Power

Policy Events

• Fed Waller Speech
• Fed Miran Speech
• Fed Bostic Speech
• Fed Logan Speech

Tickers to Watch

• Marico signs pact to buy majority stake in Vietnamese D2C company Skinetiq
• TCS needs to be prepared to take advantage of AI: N Chandrasekaran
• Tata Motors PV starts manufacturing at new TN unit; Evoque first model
• IOC, HPCL buy Venezuelan oil in second deal since imports resumed
• Sky Gold and Diamonds posts over twofold jump in Q3 profit at ₹810 million
• GlaxoSmithKline Pharma Q3 profit up 29 pc at ₹2.96 billion
• Zydus Life Q3 result: Profit up marginally at ₹10.42 billion, revenue jumps 32%

Must Read

• National interest guiding factor for India's energy imports: Vikram Misri
• India's coking coal imports shifting fast towards US, away from Australia
• NSE 'hopeful' of some review on STT hike, cites limited impact on volumes
• Moody's sees India's GDP growing 6.4% in FY27, fastest among G20 nations
• India's Russian oil imports likely to halve after White House trade order
• US order on lowering India tariff to 18% expected this week, says Piyush Goyal

 

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See you tomorrow with another edition of The Morning Edge.

 Have a great trading day

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