Nikkei returned from holiday with a jump of 3.3% to record highs, aided by a decline in the yen to historic lows and much talk of fiscal stimulus

A surge in Japanese shares led Asia higher on Tuesday amid investor bullishness over all things AI, while the cloud of uncertainty over U.S. central bank’s independence favoured gold even as it hindered the dollar.

Oil prices were on the rise as some disturbances in Iran caused concerns for supplies, while U.S. President Donald Trump warned that any country doing business with Iran will be hit by a 25% tariff on its trade with the US.

In share markets, Nikkei returned from holiday with a jump of 3.3% to record highs, aided by a decline in the yen to historic lows and much talk of fiscal stimulus.

Reports confirmed Prime Minister Sanae Takaichi planned to call an early election in the hope of bolstering her coalition’s parliamentary majority, which would provide scope for more aggressive policies.

South Korea and Taiwan also hit all-time highs, while Chinese blue chips scaled a four-year top.

We see global equities continuing to climb in 2026, targeting circa 10% upside for the MSCI AC World to year-end, said analysts at Citi in a note.

High valuations leave little room for error should companies fail to deliver on earnings forecasts, but a ‘soft landing’ macro environment, solid revisions momentum, and broadening AI-related tailwinds should ultimately be enough to support profits, the analysts added.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4% to a new record high.

In European markets, EUROSTOXX 50 futures gained 0.3%, while DAX futures added 0.1% and FTSE futures went flat.

S&P 500 futures dropped 0.1% and Nasdaq futures 0.3% ahead of a key reading on U.S. consumer prices for December. Forecasts are for annual core inflation to nudge up to 2.7%, though analysts at Goldman Sachs are tipping 2.8%.