In a remarkable move defying the broader slump in Asia, Japanese equities have surged towards a new three-decade high. This development comes at a time when global market sentiment remains somewhat muted, as investors around the world hold their breath for critical US inflation data.

The Topix index, a broad indicator of Japanese stock performance, has surpassed its previous September intraday high, reaching a 34-year high. This surge can be largely attributed to a weakening yen, which has significantly boosted stocks of Japanese exporters. Meanwhile, the Nikkei 225 index has seen a gain of over 2%, reaching its highest level since 1990 on Tuesday. These gains in Japanese equities have had a ripple effect, helping to lift an index of Asian shares higher, despite reduced trading activity in key markets like mainland China and Hong Kong.

In contrast to the dynamism in Japanese stocks, US equities futures have remained largely unchanged. The S&P 500 experienced a slight decline of 0.2% on Tuesday, while the Nasdaq 100, rich in technology stocks, rose by a similar margin. This movement signifies a continuation of the tech companies’ recovery from the intense selling witnessed last week.

Rie Nishihara, JPMorgan’s chief Japan equity strategist, offers a key insight into this trend. “With the market’s expectation of an early Federal Reserve rate cut diminishing post-new year, Japanese stocks have remained robust. This strength is underpinned by expectations that the yen’s depreciation against the dollar will bolster corporate earnings,” Nishihara explains in a recent note.

In the realm of digital currency, Bitcoin has witnessed a surge of more than 1%, reaching approximately $46,167. This uptick follows a period of volatility fueled by rumors that the US Securities and Exchange Commission (SEC) had approved spot-Bitcoin exchange-traded funds (ETFs). However, the SEC has clarified in a statement that such approvals are yet to be granted, countering a conflicting post that appeared earlier on the regulator’s official Twitter account.

Despite these market movements, the Treasury 10-year rates and the US dollar have remained stable in Asian trading. The yen has experienced further decline against the dollar, a trend attributed to a severe slowdown in Japanese worker wage growth. This trend is likely to limit the Bank of Japan’s ability to move away from its ultra-loose policy stance.

In conclusion, while Japanese equities are experiencing an unexpected surge, the global market remains in a state of cautious anticipation, closely watching for shifts in US economic data and policies. The interplay between currency valuations, corporate earnings, and regulatory developments continues to shape the financial landscape, underscoring the dynamic and interconnected nature of global markets.