GLOBAL MARKETS: Asia stocks climb as Nikkei jumps to record, earnings loom

A surge in Japanese shares led Asia higher on Tuesday amid investor bullishness over all things AI, while the cloud of uncertainty over Federal Reserve independence favoured gold even as it weighed on the dollar.

Oil prices were on the rise as unrest in Iran fanned fears for supplies, while U.S. President Donald Trump warned that any country doing business with Iran will be hit by a 25% tariff on its trade with the United States.

In share markets, Japan's Nikkei .N225 returned from holiday with a jump of 3.4% to record highs, aided by a weak yen and talk of fiscal stimulus. South Korea .KS11 and Taiwan .TWII also hit all-time peaks, while Chinese blue chips .CSI300 scaled a four-year top.

"We see global equities continuing to climb in 2026, targeting circa 10% upside for the MSCI AC World to year-end," said analysts at Citi in a note.

"High valuations leave little room for error should companies fail to deliver on earnings forecasts, but a 'soft landing' macro environment, solid revisions momentum, and broadening AI-related tailwinds should ultimately be enough to support profits."

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.8% to a fresh record peak.

In European markets, EUROSTOXX 50 futures STXEc1 added 0.2%, while DAX futures FDXc1 gained 0.1% and FTSE futures FFIc1 went flat.

S&P 500 futures ESc1 eased 0.2% and Nasdaq futures NQc1 0.3% ahead of a key reading on U.S. consumer prices for December. Forecasts are for annual core inflation to nudge up to 2.7%, though analysts at Goldman Sachs are tipping 2.8%.

Earnings season kicks off this week with results from the major banks including JPMorgan Chase JPM.N, Bank of New York Mellon BK.N, Citigroup C.N and Bank of America BAC.N.

Bank management is certain to draw questions about Trump's call for a one-year cap on credit card interest rates at 10% starting on January 20.

The banks have already warned such a step could result in millions of American households and small businesses losing access to credit, essentially a tightening in monetary policy.

GOLD SHINES THROUGH UNCERTAINTY

Investors were still pondering the U.S. Justice Department's criminal investigation of Fed Chair Jerome Powell and what it might mean for the future independence of the institution.

Analysts are worried the Fed could be pressured into lowering interest rates too far for too long, ultimately leading to a painful spike in inflation.

The unease was evident in the dollar index, which was stuck at 98.883 =USD after losing 0.25% overnight. The euro edged up to $1.1665 EUR=EBS, while the dollar slipped to 0.7972 CHF=EBS on the safe-haven Swiss franc.

It fared better on the Japanese yen at 158.40 JPY=EBS, which was having troubles of its own as it neared multi-year lows against a range of currencies.

Japan's finance minister Satsuki Katayama said she had shared concerns over what she called the yen's recent one-sided depreciation with U.S. Treasury Secretary Scott Bessent.

The fracas over the Fed proved a boon for precious metals as gold broke above $4,600 an ounce =XAU for the first time, before steadying at $4,582. GOL/

"Gold serves as a catch-all, and a default hedge of last resort for fear and uncertainty given its reputation as a safe haven and store of value, the fact that it is non-debaseable, and is no one else's liability," said Christopher Louney, a gold strategist at RBC Capital Markets.

"This is yet another instructive reminder that, while it may at times come from unexpected sources, uncertainty should be an expected upside driver of gold prices in 2026," he added, tipping gains as high as $5,200 by year end.

Oil prices reached seven-week highs on worries that Iran's exports could decline as the sanctioned OPEC member cracks down on anti-government demonstrations. O/R

Brent LCOc1 added 0.5% to $64.19 a barrel, while U.S. crude CLc1 rose 0.5% to $59.81 per barrel.

-Wayne Cole/Reuters