Asian Equities Surge on BOJ Hold; Geopolitical Tensions Persist

Lead Asian markets closed higher today, with the Kospi surging 17.9% and the Nasdaq 100 ETF gaining 3.67% after the Bank of Japan maintained its policy rate at 1%. Geopolitical concerns remain elevated following a Russian strike near Odesa and the Pentagon's request for $18.2 billion in Iran war funds. Session narrative Asian equities saw significant gains today, with the Kospi experiencing its biggest daily surge on record, closing up 17.9%. This positive sentiment followed the Bank of Japan's decision to hold its policy rate at 1%, as widely expected. BOJ Governor Ueda indicated that the year-on-year rate of increase in CPI is likely to accelerate to a level 'clearly above' 2% from the second half of fiscal year 2026, driven by AI demand and a weak yen. Tokyo's July CPI data also showed an increase, with the overall CPI rising 2.0% year-on-year, and core CPI up 1.9%. Meanwhile, geopolitical tensions continued to simmer, with reports of a Russian strike on a vessel near Odesa and the Pentagon seeking substantial funds for Iran war efforts. US equity futures are mixed in early European trading, with Nasdaq futures up 1.24% while S&P futures are up 0.46%. The US 10-year yield is at 4.66%, up 0.88%. Cross-asset check Equity markets in Asia were broadly positive, led by the Kospi's 17.9% jump. US equity futures are showing a mixed picture, with Nasdaq futures up 1.24% and S&P futures up 0.46%. The VIX is down 17.27%. In the rates market, the US 10-year yield is up 0.88% to 4.66%. The US Dollar Index is up 0.22% at 100.09. EUR/USD is down 0.13% to 1.1514, and USD/JPY is up 0.49% to 160.403. Commodities are seeing some movement, with WTI crude down 1.84% and Brent crude down 1.60%. Gold is down 0.43% and silver is down 0.41%. Themes & continuing stories The primary theme driving markets today is central bank policy, specifically the Bank of Japan's decision to maintain its policy rate. This, coupled with Governor Ueda's comments on accelerating inflation, is influencing market sentiment. Geopolitical risks remain a significant concern, with ongoing reports of military actions and defense spending requests. The interplay between inflation expectations, central bank actions, and geopolitical events continues to shape market dynamics. What’s ahead Traders will continue to monitor central bank communications for further insights into monetary policy. Geopolitical developments, particularly in Eastern Europe and the Middle East, will also remain a key focus. Any new economic data releases or corporate earnings reports could also influence market direction.