Asian stock markets opened with modest gains as regional equities built on recent momentum, led by Japan's continued record-breaking performance amid currency weakness and political developments.

Japanese Markets Lead Regional Gains

The Nikkei 225 Stock Average advanced 0.9% in early trading, extending its record-breaking run as the Japanese yen continued to weaken significantly. The currency slipped past the 159-per-dollar level, reaching its weakest position since July 2024. This currency weakness has been a key driver behind the strong performance of Japanese equities, with stocks jumping amid reports of a potential snap election in the country.

South Korea Maintains Perfect 2026 Record

South Korean shares edged higher during the session, maintaining their remarkable streak of posting gains on every trading day of 2026. This consistent performance highlights the strength in regional markets and investor confidence in South Korean equities.

US Market Pressures and Federal Reserve Outlook

Tuesday's US trading session saw the S&P 500 retreat from all-time highs, with banking sector weakness leading the decline. JPMorgan Chase & Co. spearheaded a slide in lenders after its investment-banking fees missed guidance expectations. The broader market pullback came as December inflation data failed to alter expectations that the Federal Reserve will pause interest-rate cuts.

The cooler-than-expected US consumer price index reading reinforced bond traders' projections that the Fed will wait until mid-year before implementing rate cuts. Despite Fed Chair Jerome Powell and his board reducing the benchmark rate three times in the previous year, money markets continue to project the next reduction only in mid-2026.

"The initial excitement sparked by a cooler-than-anticipated core CPI was short-lived," said Jose Torres at Interactive Brokers. "The reversal was influenced, in part, by the report's failure to pull forward the next expected rate reduction from June to April, as fixed-income watchers project Powell's December cut will be his last at the helm."

Banking Sector Earnings and Market Catalysts

Following JPMorgan's disappointing results on Tuesday, the market awaits earnings from major banking rivals including Bank of America Corp., Wells Fargo & Co., Citigroup Inc., Goldman Sachs Group Inc., and Morgan Stanley, scheduled for Wednesday and Thursday. The banking group is expected to report its second-highest annual profit ever, boosted by Trump's policy changes.

Traders are also monitoring potential developments regarding a US Supreme Court ruling on tariffs that the White House has been enforcing. An adverse ruling could trigger negative market reactions, though the administration maintains alternative legal avenues for most of the levies.

Commodity Markets Show Strength

Elsewhere in global markets, Brent crude oil notched its biggest four-day gain since June as Trump intensified rhetoric regarding Iran. Silver also extended its recent rally, capping its best three-day streak on record, reflecting broader commodity strength amid geopolitical tensions and policy uncertainties.

Asian stock markets reached record levels, tracking Wall Street's exceptional performance as investors maintained their focus on corporate earnings and inflation data. Market participants demonstrated remarkable resilience by prioritizing fundamental economic indicators over escalating political tensions.

Market Performance Highlights

The sustained rally across Asian markets reflects strong investor sentiment, with major indices following Wall Street's lead to achieve new peaks. This coordinated global market movement underscores the interconnected nature of international financial markets and investor confidence in underlying economic fundamentals.

Trump-Federal Reserve Tensions

Despite escalating attacks from Trump directed at the Federal Reserve, market participants have chosen to focus on concrete economic data rather than political rhetoric. This measured response demonstrates the market's ability to distinguish between policy noise and substantive economic developments that directly impact investment returns.

Investor Focus Areas

Market attention remains centered on two critical factors:

• Corporate Earnings: Investors continue monitoring company performance indicators and quarterly results
• Inflation Data: Economic indicators related to price stability remain a key consideration for investment decisions

The market's ability to maintain upward momentum while navigating political uncertainties highlights investor confidence in fundamental economic strength and corporate performance metrics.