Asian stocks tracked Wall Street lower on Wednesday as investors grappled with the fallout from political drama in France and Japan, while a prolonged US government shutdown catapulted gold spot prices to a record US$4,000 per ounce level.

In Hong Kong, the benchmark Hang Seng Index fell 57 points, or 0.21 percent, to open at 26,900.

The yen hovered near eight-month lows as investors awaited fiscal policy cues from Japanese prime minister-in-waiting Sanae Takaichi, while the euro was under pressure after French Prime Minister Sebastien Lecornu resigned on Monday.

That left the US dollar fairly upbeat. The dollar index, which measures the US currency against six other units, hit its highest level since the end of August, although sentiment remained dim as the shutdown was due to enter its eighth day.

In stocks, MSCI's broadest index of Asia-Pacific shares outside Japan fell 1 percent, inching away from the four-and-a-half year high it hit on Tuesday. Mainland Chinese and South Korea markets were closed for a long holiday.

Japan's Nikkei rose 0.35 percent, just shy of the record peak touched in the previous session.

All eyes are on the Japanese markets after a surprise victory over the weekend for fiscal dove Takaichi spurred worries over the fiscal and monetary policy outlook, with traders swiftly cutting their bets on another hike this year.

"Takaichi's victory in the ruling Liberal Democratic Party leadership race has shifted the balance of risks to a later rate hike in 2026," said Carol Kong, currency strategist at Commonwealth Bank of Australia.

She said option traders are now the least bearish on dollar/yen since September 2022 but she still expects the dollar to trend lower against the yen in the near term.

The yen weakened to 152.33 per US dollar, trading at its lowest level since mid-February. The yen is down over 3 percent for the week, on pace for steepest weekly decline in a year, stoking worries of intervention from Japanese authorities. (Reuters/Xinhua)