- Japanese stocks, yen extend gains after Takaichi's election victory
- S&P 500 e-mini futures show signs of exhaustion after rally
- White House primes markets for lower jobs growth
LONDON/SINGAPORE, Feb 10 (Reuters) - World shares were back at record highs on Tuesday, led by an extended rally in Japan after Prime Minister Sanae Takaichi's decisive weekend election victory, with investors also looking ahead to a busy few days for U.S. economic data.
The Nikkei 225 jumped 2.3%, rising for a third consecutive day to a fresh peak. Asia-Pacific shares outside Japan rose 0.6%, and with European shares just about in positive territory as investors digested a raft of earnings, the MSCI All-Country World Index rose 0.2% to a fresh record.
Japanese stocks had been expected to benefit from a Takaichi victory given her plans for fiscal stimulus, but, more surprisingly, Japanese government bonds and the yen, which had been expected to suffer, have rallied this week, seemingly on hopes that political stability and the stimulus will boost growth and drive investor optimism.
The most dramatic moves are still in equities, however, and the Nikkei is up 12% so far this year, also supported by a global tech rally that has boosted semiconductor and artificial intelligence-linked shares.
While tech stocks around the world, especially software names, sold off last week on fears they could be upended by artificial intelligence tools, they have since found something of a footing. The Nasdaq Composite gained 0.9% on Monday.
"We're believers in (the tech rally)," said Mike Kelly, global head of multi-asset at PineBridge Investments.
"You want to go with the new disruptive technology that's working its way through the economy and you also want to be with the winners as opposed to the losers. But it's not obvious who those are. A year ago, who would have thought software would be hit?"
"It's going to be a bumpy ride because it's a disruptive technology, but you want to get on this bucking bronco and not let go."
Google-owner Alphabet raised $20 billion on Monday with a bond offering, and has also begun marketing sterling and Swiss franc tranches.
IMPORTANT DATA
Several critical U.S. will be released this week including delayed retail sales data for December, due later in the day, as well as payrolls data for January, delayed from last week, and inflation data.
White House economic adviser Kevin Hassett said on Monday job gains could be lower in the coming months as the Trump administration's immigration policies slow labour growth and new AI tools boost productivity.
While that seemed to be a comment on the general trend, it will mean Wednesday's jobs data will be especially closely watched.
Lower employment would make it easier for the Federal Reserve to cut rates, weighing on the dollar.
The U.S. currency was broadly steady against most peers on Tuesday, apart from the yen, against which it fell 0.4% to 155.3 yen.
The U.S. dollar index , which measures its strength against a basket of six currencies, was down 0.1%, still wallowing near its lowest levels of the month at 96.86.
The index logged its biggest one-day drop in two weeks on Monday, following a Bloomberg News report that Chinese regulators had advised financial institutions to curb holdings of U.S. Treasury bonds due to concern over concentration risk and market volatility.
Treasury Secretary Scott Bessent said on Monday that senior U.S. Treasury staff visited China last week "to strengthen channels of communication".
The yield on the U.S. 10-year Treasury bond was last down 1 basis point at 4.184%.
Market pricing continues to indicate that the Federal Reserve will remain on hold until June.
Other areas of recent market stress were calmer on Tuesday. British government bonds slightly outperformed peers having lost ground on Monday as Prime Minister Keir Starmer came under increasing pressure.
Indonesian markets remained composed throughout trading in Jakarta, rising 1% and largely unswayed by FTSE Russell's decision to postpone a scheduled index review. Last month, larger rival MSCI warned that Indonesia was at risk of a downgrade to frontier status over data transparency issues.
In commodities markets, Brent crude was last a fraction lower at $68.90.
Gold fell 0.5% to $5,043 per ounce, while silver was down 1.6% at $81.90 per ounce.
Reporting by Alun John and Dhara Ranasignhe in London, Gregor Stuart Hunter in Singapre, and Stella Qiu in Sydney; Editing by Sam Holmes and Kevin Liffey
Source: Reuters