Hong Kong Leads Global Markets Higher, Yen Strengthens as Ishiba Vows to Remain in Office

Global equities mostly advanced on Monday, buoyed by optimism that several nations will secure trade deals with the United States ahead of the 1 August deadline, while the Japanese yen strengthened following Prime Minister Shigeru Ishiba’s announcement that he would remain in office despite another election setback.

Hong Kong Surges Past 25,000 for First Time in Three Years

The Hang Seng Index in Hong Kong soared past the 25,000 mark for the first time since February 2022, driven by strong performances from major tech firms including Alibaba, JD.com, and Meituan. The rally followed robust earnings from Taiwanese semiconductor giant TSMC, and positive news that US chipmaker Nvidia will be permitted to resume exports of key AI semiconductors to China.

The Hang Seng touched an intraday high of 25,010.90, marking a remarkable 25% gain since the start of the year, driven partly by increased liquidity from Beijing’s stimulus measures.

Gains were also recorded across several other Asian markets including Shanghai, Singapore, Seoul, Wellington, Manila, and Jakarta. Sydney and Taipei saw modest declines, while Tokyo remained closed for a national holiday.

Trade Deal Hopes Boost Market Sentiment

Only three countries have so far secured agreements to sidestep US tariffs imposed by Donald Trump, but analysts believe others—including Japan and South Korea—may soon follow. This has provided a lift to global sentiment, further supported by strong US economic data, which has pushed Wall Street to repeated record highs.

Nvidia and AI Chips Fuel Tech Optimism

Nvidia’s announcement that it will resume the sale of H20 AI chips to China helped strengthen tech stocks. The move follows the US government’s decision to lift licensing restrictions that had previously blocked such exports.

Yen Strengthens Amid Political Turmoil in Japan

The yen gained ground against the US dollar after Prime Minister Shigeru Ishiba declared he would remain in power despite his ruling coalition losing its overall majority in Sunday’s lower house elections, months after a similar loss in the upper house.

The yen hit an early peak of 147.79 per dollar before settling at 148.45, still stronger than Friday’s close. The recent weakness in the currency had been linked to fears that a significant election defeat might prompt large-scale fiscal stimulus or tax cuts.

However, analysts now believe Ishiba’s decision to stay may offer short-term political stability, though pressure is mounting on the coalition to cut or abolish Japan’s consumption tax—a move Ishiba has previously resisted due to the country’s massive public debt, which exceeds 200% of GDP.

Trade Negotiation Challenges Ahead

Ishiba also faces challenges in reaching a trade agreement with the United States, as Trump has threatened to impose 25% tariffs on Japanese goods if a deal is not finalised by 1 August.

“The deadline of US tariffs is coming on August 1. Until then we have to do our best with our body and soul,” said Ishiba.

US Treasury Secretary Scott Bessent offered a cautiously optimistic outlook, stating on Friday that a “mutually beneficial trade agreement… remains within the realm of possibility.”

Meanwhile, Jiji Press reported that Ishiba would formally confirm his intention to remain in office during a meeting of senior Liberal Democratic Party (LDP) officials on Monday.

Uncertain Political Landscape Weighs on Markets

Though Ishiba’s decision offers a degree of continuity, the election result raises questions about the direction of fiscal policy, political leadership, and future trade negotiations.

“The result raises a host of questions, including whether Ishiba remains in power or decides to resign, how potentially expansionary fiscal policy might become, and whether domestic politics will hinder trade talks with the US,” wrote Paul Mackel, Global Head of Forex Research at HSBC.

Others have warned that the yen could still come under renewed pressure, possibly weakening beyond 150 per dollar, amid persistent leadership uncertainty.

Commodities Snapshot (as of 02:30 GMT)

With multiple global developments in play—including trade talks, political transitions, and strong tech momentum—investors are bracing for a volatile yet potentially rewarding period across equities, currency markets, and commodities.