Asia stocks hold near record levels, treasuries steady

Shares edged lower in South Korea and Australia. Bloomberg

• Asian equities rose, led by Japan's Topix Index, despite geopolitical concerns
• Markets remain bullish, driven by tech and AI-linked stocks
• Key US economic data this week may influence Fed rate decisions

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Asian equities posted a modest gain at the open Tuesday, holding near record levels as geopolitical concerns failed to deter investors from adding to their portfolios.

The MSCI Asia Pacific Index rose 0.1%, extending its advance to a fourth day, led by a 1.1% jump for the Topix Index in Japan. Shares edged lower in South Korea and Australia. Equity-index futures pointed to gains for China after shares rallied on Wall Street, with megacaps such as Amazon.com Inc. and Tesla Inc. among the winners.

Gold and silver gave up some of the gains that came after the US capture of Venezuela’s President Nicolas Maduro. Treasuries steadied after the 10-year yield fell three basis points on Monday, when a report showed US manufacturing activity shrank in December by the most since 2024. That supported the case for more easing by the Federal Reserve.

Equity traders appear largely unfazed by tensions in Latin America, with markets extending a three-year bull run driven by demand for technology and artificial-intelligence–linked stocks. Stocks have bounced back from April lows as rate cuts by the Fed and optimism around AI-supported earnings buoyed sentiment.

“The bullish case for equities remains intact,” said Adrian Helfert, chief investment officer at Westwood. “Broader market leadership should look past Venezuela entirely unless cascading geopolitical events emerge.”

This is poised to be a “strong year” for risk assets — the triumvirate of easing fiscal, monetary, and regulatory policy should work together in a pro-cyclical way, Morgan Stanley’s Serena Tang and Seth Carpenter wrote in a note Monday.

For stocks, the main themes, in the US especially, will be stronger earnings growth and broadening leadership, while AI financing and a revival of M&A will take center stage in credit markets. The analysts are overweight on global equities.

“Macro concerns still matter, but micro will become a larger driver of asset returns in this cyclical recovery,” they said.

The bullish attitude showed up in equity derivatives as well.

A “mix of momentum chasing and rebound plays reflects a more constructive tone than most of 2025, with sentiment and positioning turning decisively less bearish,” said derivatives strategist Chris Murphy of Susquehanna International Group, in a note Monday. “That optimism is showing up clearly in options activity, where upside structures dominate and consistent with a market increasingly positioned for strength rather than defense.”

Markets closely followed the developments in Venezuela, with Brent crude rising 1.7% to $61.76 a barrel. The country’s deeply discounted bonds traded higher after the capture of Maduro.

Key US economic data will likely shape the week ahead. In addition to the December jobs report, the Bureau of Labor Statistics will issue figures on Wednesday for November job openings, quits and layoffs. The Fed lowered its target band for short-term lending rates at its past three meetings in response to weakening labor-market conditions, and officials are expected to reduce it further this year.

Later in the week, the US government will report on housing starts, while the University of Michigan issues its preliminary January consumer sentiment index.

“Even as geopolitics are once again top of mind for investors, we’re reminded that this week offers an array of key fundamental updates,” wrote Ian Lyngen at BMO Capital Markets. That’s “still the most relevant wild card for the US economy and monetary policy.”