Asian Stocks Fluctuate After Wall Street Rebound: Markets Wrap

Asian stocks showed fluctuations on Monday following a rebound in Wall Street, which ended a five-day losing streak. This recovery was largely driven by renewed interest in large technology stocks.

In Australia, shares climbed by 0.4%, whereas Japan's Topix index experienced a decline following a multiday holiday. Meanwhile, US futures remained relatively unchanged after the S&P 500 posted a 1.3% increase on Friday, bringing to an end a selloff that had resulted in over one trillion dollars being lost from the equity market.

Currency trading exhibited mixed results early on Monday. The US dollar's performance varied against major currencies, while the Japanese yen retreated slightly, trading around 157 yen per dollar. Attention is also focused on the daily fixing of China’s currency since the onshore yuan recently crossed an important threshold, marking its lowest levels since late 2023.

Investor sentiment appears mixed as risk appetite fluctuates, following declines toward the end of the last trading year that have continued into 2025. The expectation of monetary policy easing, along with optimism surrounding artificial intelligence, has the potential to support market gains. However, ongoing trade tensions between the US and China could pose risks to such a rally. Investors are also looking for more stimulus efforts from Beijing.

According to a note from analysts at Goldman Sachs, "We anticipate policymakers will reduce interest rates across most Asian economies in 2025, with Japan being the notable exception as we expect ongoing reflation efforts and interest rate increases this year."

Technology stocks in Asia are drawing attention due to the recent market actions in New York. Hon Hai Precision Industry Co., commonly known as Foxconn and recognized as a key assembly partner for companies like Apple and Nvidia Corp, reported earnings that exceeded market expectations. This is a positive indicator for the sustained demand for AI infrastructure.

Investors are also awaiting key data releases, including China's Caixin services and composite PMI, inflation figures from Thailand, and industrial production data from Vietnam. Additionally, Israel's central bank is expected to announce an interest rate decision, along with upcoming data from Germany and the US.

In South Korea, a court recently dismissed an appeal related to an arrest warrant issued for Yoon Suk Yeol, the impeached president, as reported by local media.

Insights from the US Federal Reserve

In the United States, Federal Reserve Governor Lisa Cook is scheduled to speak at a conference focused on law and microeconomics at the University of Michigan. Her colleague, Tom Barkin, President of the Richmond Fed, expressed a preference for maintaining restrictive interest rates for an extended period. These comments come as recent data indicate that the US economy remains robust, complicating the outlook for future interest rate adjustments. This follows a hawkish shift by Fed Chair Jerome Powell in December.

Additionally, investors are speculating about the implications of Donald Trump’s return to the White House in two weeks, with market clarity expected post-January 20. According to Laura Cooper, a global investment strategist at Nuveen, "US exceptionalism will remain a key focus, particularly in the first half of the year, regardless of the emerging policies."

In other news, President Joe Biden is expected to implement a ban on new offshore oil and gas developments covering approximately 625 million acres of coastal territory in the US, effectively prohibiting the sale of drilling rights in several waters.

West Texas Intermediate crude oil prices have climbed, continuing a rally from the previous week to trade around $74 per barrel, while gold prices remained steady at about $2,640 per ounce.

Upcoming significant economic events this week include:

• China Caixin services and composite PMI, Monday

• Eurozone HCOB services and composite PMI, Monday

• Germany CPI, Monday

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

• Comments from Fed Governor Lisa Cook, Monday

• Eurozone CPI and unemployment rate data, Tuesday

• US job openings and trade figures, Tuesday

• Comments from Richmond Fed President Thomas Barkin, Tuesday

• Eurozone PPI and consumer confidence data, Wednesday

• FOMC meeting minutes, Wednesday

• Fed Governor Christopher Waller's remarks, Wednesday

• Comments from ECB Governing Council member Francois Villeroy de Galhau, Wednesday

• China CPI and PPI data, Thursday

• Eurozone retail sales data, Thursday

• Comments from BOE Deputy Governor Sarah Breeden, Thursday

• Japan's household spending and leading index reports, Friday

• US nonfarm payrolls, unemployment data, and University of Michigan consumer sentiment index, Friday

Key market movements today include:

Stock Performance

• As of 9:01 a.m. Tokyo time, S&P 500 futures showed little movement.

• Japan's Topix index experienced a slight uptick of 0.3%.

• Australia's S&P/ASX 200 index saw a rise of 0.4%.

• Euro Stoxx 50 futures declined by 0.9%.

Currency Movements

• The Bloomberg Dollar Spot Index remained largely unchanged.

• The euro's value was stable at $1.0304.

• The Japanese yen fell by 0.2%, trading at 157.53 per dollar.

• The offshore yuan showed little change at 7.3604 per dollar.

Cryptocurrency Activity

• Bitcoin's price remained stable at $98,508.15.

• Ether experienced a slight decline of 0.1%, trading at $3,641.4.

Bond Activity

• Ten-year Treasury yields increased by two basis points to 4.62%.

• Australia's ten-year yield rose by six basis points to 4.44%.

Commodities Market

• West Texas Intermediate crude oil increased by 0.3%, trading at $74.18 per barrel.

• Spot gold prices remained steady.

Stocks, Market, US, Asia, Economy