Asian Stocks React to Wall Street Rebound: Market Overview

Asian stocks exhibited fluctuating trends following a rebound on Wall Street, which ended a lengthy selloff. Investors are currently displaying a cautious approach to risk, influenced by recent declines that stretched into the early days of 2025.

On this Monday, equity futures for countries including Australia, Hong Kong, Taiwan, and Singapore saw slight increases. Australian shares rose by 0.4%, while Japan's Topix index faced a drop as it resumed trading after a holiday period. US contracts remained stable after the S&P 500 marked a 1.3% increase last Friday, breaking a five-day losing streak that had erased over a trillion dollars from the equity market.

The forex market showed mixed outcomes in early trading on Monday. The US dollar fluctuated against other major currencies, while the Japanese yen saw a reduction in its recent gains, trading around 157 yen per dollar. Attention is drawn towards the daily fixing of China’s yuan, particularly after it recently crossed a significant threshold.

Investor sentiment remains divided as declines from the last trading sessions of 2024 have carried over into the current year. Speculations about monetary policy easing and persistent enthusiasm surrounding artificial intelligence technology could contribute to potential gains. However, possible US-China trade tensions also threaten to disrupt any positive momentum. Additionally, the market watches for forthcoming stimulus measures from China.

Goldman Sachs analysts, including Andrew Tilton, predict that many Asian economies will likely implement interest rate cuts throughout 2025, with Japan being the notable exception as it is expected to experience continued reflation and interest rate hikes.

Tech-related stocks are anticipated to draw significant attention due to developments in the New York market on Friday. For instance, Hon Hai Precision Industry Co., known as Foxconn and a major assembler for firms like Nvidia and Apple, reported revenue results that were better than expected, indicating strong ongoing demand for AI infrastructure.

Upcoming data will include the China Caixin services and composite PMI, Thai inflation figures, and Vietnam's industrial production statistics. In other developments, Israel’s central bank is scheduled to announce an interest rate decision. Data to be released later will include Germany’s inflation numbers and factory orders from the US.

Insights from the Federal Reserve

In the United States, Federal Reserve Governor Lisa Cook is set to deliver a speech at a conference focused on law and microeconomics at the University of Michigan. Similarly, Richmond Fed President Tom Barkin hinted at his preference for maintaining restrictive interest rates for a longer period.

These statements, along with indicators showing robustness in the US economy, present challenges for investors as they attempt to interpret the future trajectory of US interest rates, particularly in light of Federal Reserve Chair Jerome Powell's December hawkish pivot.

As the market anticipates Donald Trump's potential return to the presidency in the coming weeks, experts suggest clarity on upcoming policies could provide the market with greater conviction. Laura Cooper, a global investment strategist at Nuveen, emphasized the ongoing theme of US exceptionalism prevailing through at least the first half of the year.

In political matters, President Joe Biden plans to initiate a ban on new offshore oil and gas development over approximately 625 million acres of US coastal territory.

In commodity markets, West Texas Intermediate oil prices climbed to around $74 per barrel, maintaining momentum from the previous week, while gold prices remained steady near $2,640 per ounce.

Main Events This Week:

• Monday: China Caixin services and composite PMI

• Monday: Eurozone HCOB services and composite PMI

• Monday: Germany CPI

• Monday: US factory orders, S&P Global services and composite PMI

• Monday: Speech by Fed Governor Lisa Cook

• Tuesday: Eurozone CPI and unemployment data

• Tuesday: US job openings, trade, ISM services

• Tuesday: Speech by Richmond Fed President Thomas Barkin

• Wednesday: Eurozone PPI and consumer confidence

• Wednesday: FOMC minutes

• Wednesday: Speech by Fed Governor Christopher Waller

• Thursday: China CPI and PPI

• Thursday: Eurozone retail sales

• Thursday: Speech by BOE Deputy Governor Sarah Breeden

• Friday: Japan household spending and leading index

• Friday: US nonfarm payrolls and unemployment data

• Friday: University of Michigan consumer sentiment

Market Movements:

Here are some key market changes observed:

Stocks

• S&P 500 futures were steady by 9:01 a.m. Tokyo time

• Japan’s Topix increased by 0.3%

• Australia’s S&P/ASX 200 rose by 0.4%

• Euro Stoxx 50 futures decreased by 0.9%

Currencies

• The Bloomberg Dollar Spot Index remained stable

• The euro traded flat at $1.0304

• The Japanese yen slipped 0.2% to 157.53 per dollar

• The offshore yuan showed little change around 7.3604 per dollar

Cryptocurrencies

• Bitcoin held steady at $98,508.15

• Ether decreased by 0.1% to $3,641.4

Bonds

• The yield on 10-year Treasuries rose by two basis points to 4.62%

• Australia’s 10-year yield increased by six basis points to 4.44%

Commodities

• West Texas Intermediate crude grew by 0.3% reaching $74.18 a barrel

• Spot gold remained stable

Stocks, Markets, Asia