Still, analysts at BofA had some words of caution, noting that their gauge of investor sentiment had moved into extremely bullish territory at 8.5, often a harbinger of a reversal.“Placements above 8.0 have often preceded pullbacks, with global stocks falling an average of 2.7% over the subsequent two months, with a 63% strike rate,” they wrote in a note.
“Sentiment data reinforces the warning signal: the Fund Manager Survey shows the most bullish sentiment in 3-1/2 years, driven by expectations of interest, rate and tax cuts.”
For now, the fear of missing out seemed to be growing and futures on the S&P 500 added another 0.2%, while futures on the Nasdaq rose 0.3%.
Japan’s Nikkei climbed 1.5%, extending Friday’s recovery as a sharp decline in the yen promised to boost export earnings for Japanese companies. The yen sell-off came as the Bank of Japan raised interest rates to a 30-year high of 0.75%, putting heavy selling pressure on government debt.
The minutes of the BOJ meeting will be released on Wednesday, as the central bank chief addresses a Japanese business lobby on Christmas Day.
ABOUT INTERVENTION VIEW
The yen reached a new record trough for the euro at 184.90 and for the Swiss franc at 198.08. The dollar rose to 157.67, although investors were wary of testing the November peak of 157.90 in case it prompted intervention from Tokyo. Japan’s chief currency official rightly raised concerns about one-way trading and warned of appropriate action against an excessive decline.
A break of 158.00 higher would target the 2025 top of 158.88, and then the 2024 top at 161.96. The dollar was otherwise steady across a basket of currencies at 98.725, after rising 0.3% on Friday.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, while South Korea rose 1.8% on optimism about AI-related gains.
Analysts at TD Securities noted that stock markets recorded their highest-ever weekly inflows last week at $98 billion, led by U.S. stock funds. Chinese equity funds saw their third largest weekly inflows in 2025, and emerging markets saw their largest inflows since April.
However, outflows into bonds slowed for the fourth week in a row. Yields on Japanese 10-year government bonds rose another 2.5 basis points to the highest level since 1999, while US 10-year yields rose to 4.157%.
Silver was once again the commodity star, reaching a new record high of $67.48 per ounce and bringing gains for the year to almost 134%. Gold rose 0.6% on the day to $4,362 an ounce. Oil prices rose after the US intercepted a Venezuelan oil tanker this weekend and pursued another tanker in what was believed to be the third such operation in less than two weeks.
Brent rose 0.7% to $60.88 per barrel, while U.S. crude rose 0.7% to $56.89 per barrel.
#Asian #shares #extend #tech #rally #yen #pressure