Japanese Yen Plummets, Asian Markets Open Mixed
Asian-Pacific markets opened variably on Wednesday (2/7/2026) amid the Japanese yen’s slide to its lowest level in 40 years against the United States (US) dollar. Market participants are also monitoring the direction of the US central bank’s interest rate policy and several important economic data releases due today.
LSEG data showed the Japanese yen weakened to touch 162.28 per US dollar, extending the decline from the previous session. This condition has made investors wary of potential intervention by Japanese authorities to stem the currency’s depreciation.
Japan’s Nikkei 225 index strengthened 1.79% in early trade. Meanwhile, the broader Topix index rose 1.07%. In South Korea, the Kospi index gained 1.52%. However, the small-cap Kosdaq index fell 0.42%. Australia’s stock market was relatively flat, with the S&P/ASX 200 index edging down 0.05% in morning trade.
Market sentiment was also influenced by movements on Wall Street. Dow Jones futures weakened in overnight trade after the index recorded its best first-half performance in five years. Entering the second half of the year, Bespoke Investment Group Co-Founder Paul Hickey assessed that the semiconductor sector remains attractive in the long term, though he cautioned that the recent rally has made valuations appear overheated.
According to Hickey, the bullish market is driven by the artificial intelligence (AI) theme, but he noted that technology and semiconductor stocks do not need to consistently deliver exceptional performance to sustain the market’s upward trend. He added that some semiconductor shares have risen significantly and are now in overbought territory, suggesting investors should pause before adding further exposure to the sector.
On the monetary policy front, investors are awaiting a speech by Federal Reserve Chair Kevin Warsh at the European Central Bank Forum on Central Banking in Sintra, Portugal. Since taking office, Warsh has introduced several task forces to review the Fed’s strategy in formulating modern monetary policy. Market participants continue to assess the Fed’s next steps in dealing with persistent inflationary pressures, with some investors believing the US central bank still has room to raise interest rates if inflation does not show a decline towards its target.
Additionally, markets will scrutinise several key economic data releases on Wednesday, including the ADP employment survey for June, the ISM manufacturing activity index for June, and the final reading of the global manufacturing PMI, which could provide clues about the economic outlook and the direction of US monetary policy.