Asian Stocks Fluctuate After Wall Street Rebound: Markets Wrap

Asian stocks experienced mixed movements on the first trading day of 2025, reflecting a cautious investor sentiment following Wall Street's recovery.

Market Overview

Investors displayed a varied appetite for risk as the stock declines from the previous year extended into the new year. Equity futures in Australia, Hong Kong, Taiwan, and Singapore rose slightly. In contrast, Japan's Topix faced a drop after a multi-day holiday. On the back of a halt in a five-day losing streak, the S&P 500 on Wall Street saw a 1.3% increase, ending a significant selloff that resulted in a loss of over a trillion dollars in the equity market.

Currency Trends

The U.S. dollar showed mixed results against major currencies in the early hours of trading. After gaining strength last week, the Japanese yen weakened slightly, trading around 157 per U.S. dollar. The onshore yuan attracted attention following its breach of a significant threshold.

Investor Outlook

Investor interest remains uncertain as market declines continue from late 2024. However, anticipated monetary policy easing and optimism in the artificial intelligence sector could drive gains. Yet, persistent trade tensions between the U.S. and China may undermine market rallies. Investors are also looking for potential stimulus measures from Beijing.

Analysts from Goldman Sachs predict widespread interest rate cuts across most Asian economies in 2025, with Japan expected to maintain a different course due to ongoing reflation efforts.

Focus on Technology Stocks

In Asia, technology shares are under observation due to movements in U.S. trading. Taiwan's Hon Hai Precision Industry Co., known as Foxconn and a partner of companies like Apple and Nvidia Corp., reported higher-than-expected revenue, boosting confidence in AI-related demands.

Global Economic Data

Important economic data expected this week includes China's Caixin services and composite PMI, Thai inflation metrics, and industrial production indicators for Vietnam. The week will also feature Israel's central bank interest rate decision alongside updates on German inflation and U.S. factory orders.

Federal Reserve Insights

In the United States, Federal Reserve discussions are a focal point. Governor Lisa Cook will speak at a University of Michigan event, while Richmond Fed President Tom Barkin recently expressed a preference for maintaining restrictive rates longer. These discussions contribute to the uncertainty as investors try to decipher the future trajectory of U.S. interest rates after recent hawkish signals from Fed Chair Jerome Powell.

Consequential Developments

Speculations about former President Donald Trump's return to the White House are also influencing market sentiment. Clarity regarding political and economic policies following January 20 is awaited by many investors for better conviction in market movements.

Meanwhile, President Joe Biden is reportedly set to prohibit new offshore oil and gas drilling across substantial U.S. coastal areas, affecting approximately 625 million acres of ocean territory.

Current Market Movements

West Texas Intermediate crude prices have risen, trading around $74 per barrel, while gold prices remain stable at about $2,640 per ounce.

Key Upcoming Events

Major economic announcements this week will include the following:

• China Caixin services and composite PMI, Monday
• Eurozone HCOB services and composite PMI, Monday
• Germany CPI, Monday
• U.S. factory orders, S&P Global services and composite PMI, Monday
• Fed Governor Lisa Cook speaks, Monday
• Eurozone CPI, unemployment, Tuesday
• U.S. job openings, trade balance, ISM services, Tuesday
• Richmond Fed President Thomas Barkin speaks, Tuesday
• Eurozone PPI, consumer confidence, Wednesday
• FOMC minutes, Wednesday
• Fed Governor Christopher Waller speaks, Wednesday
• ECB Council member Francois Villeroy de Galhau speaks, Wednesday
• China CPI and PPI, Thursday
• Eurozone retail sales, Thursday
• BOE Deputy Governor Sarah Breeden speaks, Thursday
• Japan household spending, leading index, Friday
• U.S. nonfarm payrolls, unemployment, University of Michigan consumer sentiment, Friday

Market Summary

As markets react to these developments:

• S&P 500 futures showed minimal change as of early Monday in Tokyo.
• Japan’s Topix rose by 0.3%.
• Australia’s S&P/ASX 200 saw an increase of 0.4%.
• However, Euro Stoxx 50 futures dropped by 0.9%.

On the currency front:

• The Bloomberg Dollar Spot Index remained relatively unchanged.
• The euro remained steady at $1.0304.
• The Japanese yen fell to 157.53 per dollar.
• The offshore yuan held steady at 7.3604 per dollar.

For cryptocurrencies:

• Bitcoin remained stable at $98,508.15.
• Ether dropped slightly by 0.1% to $3,641.4.

In the bond market:

• The yield on 10-year U.S. Treasuries rose by two basis points to 4.62%.
• Australia’s 10-year yield increased by six basis points to 4.44%.

In commodities:

• West Texas Intermediate crude climbed 0.3% to reach $74.18 a barrel.
• Spot gold prices remained largely unchanged.

China's central bank has emphasized its commitment to support innovation and consumption, which could further impact market dynamics.

Stocks, Market, Economy