Asia Kicks Off New Year After Ominous End To 2024: Markets Wrap

As Asia steps into the New Year, markets are treading cautiously following a troubling end to 2024, a year that had otherwise been strong for global equity investors. The recent trends from late December have cast a shadow, leading many to proceed with vigilance.

Market Reactions in Asia

In Sydney, shares displayed minimal changes, showing little movement as traders assess the broader market sentiment. Meanwhile, futures indicated a slight potential rise for Hong Kong’s benchmark, suggesting a mixed outlook for the markets as they reopen.

On the mainland, futures for Shanghai fell, reflecting the significant drops experienced during the final trading sessions of December. This fall was echoed in the performance of major U.S. indices, like the S&P 500 and Nasdaq 100, both of which faced a fourth consecutive decline as the year concluded. This trend culminated in a staggering loss exceeding a trillion dollars in market valuation for large-cap companies.

Currency and Commodity Updates

Among the currency markets, the Japanese yen declined around 157 per dollar, marking a third consecutive day of loss against the greenback. This is part of a broader trend where the U.S. dollar has enjoyed its most successful year in nearly a decade, as indicated by the performance of the Bloomberg Dollar Spot Index.

In commodities, oil prices remained steady as trading resumed for the new year. Reports indicate a decrease in U.S. crude stockpiles, which could stabilize prices moving forward. On a different note, Russia has ceased gas supplies to Europe via Ukraine, marking the end of a route that has been operational for over fifty years due to the expiration of a crucial transit agreement.

Corporate Actions and Economic Outlooks

On the corporate front, notable developments took place during the holiday. Nippon Steel Corp. has proposed granting the U.S. government veto power over any production capacity cuts at U.S. Steel Corp. in a last-minute effort to gain regulatory approval for its acquisition. The announcement led to a significant surge in U.S. Steel's stock, marking its highest rise in a year.

In China, Alibaba Group Holding Ltd. finalized plans to sell its shares in Sun Art Retail Group to DCP Capital, shifting its strategy back to prioritizing its online business. Meanwhile, BYD Co. logged an impressive year-end surge, finalizing a total of 4.25 million passenger car sales for 2024, cementing its position in the automotive market.

Economically, China is projected to grow by approximately 5% in 2024, as stated by President Xi Jinping. In a bid to support liquidity, China's central bank pumped 1.7 trillion yuan (about $233 billion) into the market in December.

Regional Economic Performance

Singapore's economy exceeded expectations in 2024, growing by 4%, as announced by Prime Minister Lawrence Wong. This result is notably higher than the previously forecasted 3.5% growth by trade officials.

However, South Korea continues to face political turmoil, with Acting President Choi Sang-mok rejecting mass resignation efforts from his advisory team on Wednesday. Additionally, Australia reported a downturn in house prices for the first time in nearly two years, with an influx of properties leading to reduced affordability for buyers.

Investment Landscape Ahead

Abu Dhabi’s Mubadala Investment Company emerged as the most proactive sovereign wealth fund in 2024, strategically increasing its investment across sectors like private credit and artificial intelligence. In contrast, Saudi Arabia's Public Investment Fund has reportedly slowed its spending, refocusing its investments domestically.

U.S. technology stocks thrived in 2024, with the S&P 500 indexing an impressive 23% rise, adding about $10 trillion in equity values through the year. As investors look towards 2025, they are met with challenges, particularly concerning inflation and the Federal Reserve's future monetary policy moves. This is compounded by the anticipated economic impact of President-elect Donald Trump's upcoming policies.

Key Economic Announcements

This week is set to deliver key economic data, including reports on U.S. construction spending, jobless claims, and manufacturing PMI on Thursday, followed by ISM manufacturing stats and vehicle sales on Friday.

As of the current market snapshot (8:15 a.m. Tokyo time):

Stock Futures

• S&P 500 futures dipped by 0.1%
• Hang Seng futures showed a slight rise of 0.3%
• Australia’s S&P/ASX 200 remained largely unchanged

Currency Overview

• The Bloomberg Dollar Spot Index remained stable
• The euro held steady at $1.0351
• The Japanese yen declined to 157.69 per dollar
• The offshore yuan remained unchanged at 7.3344 per dollar

Cryptocurrencies

• Bitcoin slightly fell to $94,329.7
• Ether also decreased by 0.4%, sitting at $3,349.42

Bonds

• Yield on 10-year Treasuries remained unchanged at 4.57%
• Japan's 10-year yield declined by two basis points to 1.090%
• Australia's 10-year yield rose six basis points to 4.42%

Commodities

• West Texas Intermediate crude rose by 0.4% to $71.98 per barrel
• Spot gold prices remained stable

Asia, Markets, NewYear, Stocks, Economy