Asia open: When belief trades like policy

Markets in Asia open to a curious blend of confidence and calculation — a trader’s cocktail of AI exuberance, policy anticipation, and tariff diplomacy. Wall Street’s latest session offered little fireworks on the surface, yet under the hood the message was unmistakable: liquidity is whispering its way back, and belief — that most expensive of market currencies — is again in circulation.

In New York, the S&P 500 crept higher, its broad base catching its breath, but the Mag7 index once again stole the scene, climbing 1.3%. Nvidia, the patron saint of the AI boom, jumped nearly 5% after Jensen Huang reminded investors that innovation — when framed as infrastructure — rarely meets resistance. With SK Hynix posting record earnings, the narrative has legs: this isn’t a hype cycle anymore; it’s an arms race of silicon and software, where capital expenditure is the new oil and data centers are the refineries. The market now treats these giants less like tech plays and more like regulated utilities of the digital age — indispensable, monopolistic, and cash-rich.

That mindset is carrying over to Asia. Futures in Tokyo signal gains, again reminding everyone that a weak yen is no longer a prerequisite for Tokyo’s bull market. In an AI-anchored world, Japan’s equity engine runs less on currency leverage and more on technological gravity — global capex flows, repatriated profits, and the re-rating of its industrial core. The Nikkei’s ascent now speaks the language of innovation and fiscal ambition rather than mere FX arithmetic. Japan has become a net beneficiary of the AI value chain, proving that strength in the yen doesn’t have to mean weakness in stocks — not when the Takachi Renaissance is re-engineering the country’s balance sheet.

The home bid, once an afterthought, is now structure—driven by domestic funds rotating capital back to Tokyo as market confidence grows. The GPIF is humming in the background, and corporate treasuries are leading this quiet modern-day industrial revolution, reinforcing the idea that Japan’s liquidity pool is deepening from within. The Takachi Renaissance isn’t just a slogan; it’s a wholesale rewiring of how Japan funds itself, innovates, and trades with the world — a fiscal and industrial awakening that no longer needs the crutch of a cheap currency.

Seoul, too, is positioned to catch the semiconductor breeze. Hong Kong rests for the holiday, perhaps mercifully, while Sydney remains indecisive — the region’s risk appetite still calibrating around the Fed’s next move. Oil trades steady after its recent slide, reflecting oversupply rather than demand weakness, while gold drifts — a victim of its own success as safe-haven flows unwind.

This week is the the S&P Super Bowl of Earnings — the crucible where a quarter of the S&P reports. The market isn’t just watching profits; it’s auditing belief. Will the billions poured into chips, servers, and neural nets continue to compound, or are we nearing the saturation point of AI faith? Thus far, the tape says conviction remains unshaken. The AI narrative has become the market’s gravity — it bends everything toward it, from FX to credit spreads.

Yet the macro backdrop carries its own undertones. The Fed meets tonight, and traders are already pricing a quarter-point cut with a lot more coming down the pipe. What matters isn’t the cut itself — it’s the choreography. The market wants Powell to bless the easing cycle while keeping the inflation ghosts in the background. There’s even chatter that the Fed could declare an end to QT soon, perhaps even tiptoe toward outright bond purchases again. That would be a quiet revolution — the return of the central bank as market sponsor, not referee.

Meanwhile, Trump’s diplomacy is once again fusing trade and theatre. The emerging U.S.–China framework — a partial tariff rollback in exchange for controls on fentanyl precursors — is less about chemistry and more about optics. A 10-point cut on fentanyl-linked tariffs would trim the average Chinese import levy from 55% to 45%, restoring a veneer of normalcy. For U.S. buyers, it’s a modest relief; for China, a moral victory wrapped in pragmatism. But for ASEAN exporters who’ve spent the past year filling China’s supply-chain vacuum, it’s a subtle warning: the hand that feeds them may soon feed itself again. Korea and Japan, too, are part of that equation — beneficiaries of the China-US export slowdown now facing the return of the export dragon.

Still, optimism is the currency of the moment. What’s good for the American goose — AI capex, Fed liquidity, tariff détente — looks equally nourishing for the Asian gander. Tech-heavy markets like Taiwan and Japan thrive when capital flows to the future, and right now, the future has a ticker symbol. Microsoft and OpenAI’s restructuring into a $500 billion public-benefit corporation adds yet another strand to the AI web — a signal that private capital and public purpose are merging into one sprawling, self-reinforcing ecosystem. The skeptics warn of concentration risk, but that’s a problem for tomorrow. For now, the AI juggernaut has the stage, and the market loves a familiar lead actor.

The only counterpoint comes from the labour tape. Amazon and UPS announcing 62,000 job cuts would typically dominate headlines — but in this liquidity cycle, layoffs are seen as margin management, not distress. The Fed may eventually care; markets, for now, do not. As long as AI is hiring servers faster than firms are firing staff, the narrative remains bullish.

So Asia wakes not to euphoria but to endurance — a market that refuses to cool, a faith that refuses to fade. The flow of money, like belief itself, always finds its next vessel. And this week, that vessel looks a lot like silicon, diplomacy, and a dovish Fed whispering that the party isn’t over — just quietly resetting the lights.