Morning wrap (06.10.2025)

In the first part of the day, investor attention in the Asia-Pacific region is focused on Japan’s election, where Sanae Takaichi won the Liberal Democratic Party (LDP) leadership race. The JP225 index is up 4.60% to a record high of 48,100 points.

Takaichi is considered to have the most expansionary fiscal and monetary agenda among the five LDP candidates who were vying to replace hawkish Prime Minister Shigeru Ishiba.

Reports suggest Takaichi may appoint Minoru Kihara as Chief Cabinet Secretary and reinstate Toshimitsu Motegi as Foreign Minister. The Finance Ministry position remains vacant, adding to market sensitivity.

The yen is down between 0.9% and 1.2%, with USDJPY gaining 0.90% to 150.400. Markets have begun pricing in expansionary fiscal policy and a slower pace of BoJ rate hikes.

Gold is up 1.20% to a new record high of $3,920 per ounce.

Oil also opened higher after a moderate OPEC+ decision to increase production slightly next month — far below earlier fears. Weekend analysis suggests the hike is less than half of what was initially discussed.

The Melbourne Institute inflation gauge rose +0.4% m/m (previously −0.3%), lifting the annual rate to 3.0% from 2.8%. The data complicate expectations for further rate cuts by the RBA in the near term.

The U.S. government shutdown has now lasted more than a week, delaying the release of some economic data and increasing political noise. The White House has warned of potential layoffs if negotiations remain stalled, though markets still price in a 25 bp Fed rate cut this month with high probability. A prolonged stalemate could heighten nerves, but the short-term impact remains mostly operational.

Bankers are warning about leverage in “corporate Bitcoin treasuries.” Around 190 listed companies collectively hold about 1.01 million BTC, much of it financed through debt or share issuance. Bankers fear that a price drop could trigger forced sales or takeovers.