Asian Markets Surging: Asian markets kicked off the week on a positive note, drawing inspiration from Wall Street’s robust Friday rally. Despite Moody’s downgrading the U.S. credit outlook, investors seem unfazed, especially as tech stocks continue to stand out, echoing the trend observed in the U.S. last week.
Notably, the calming of long-term Treasury yields throughout this month has given a boost to the outlook for growth shares, particularly those dependent on borrowing. While U.S. 10-year Treasury yields remained stable at around 4.646%, the focus shifts to their consolidation around the top of the range since November 3, following softer labor market data that eased concerns about a hawkish Federal Reserve.
The U.S. dollar index, having reached a post-payrolls-report high of 106.01 on Friday, now hovers around 105.80, exhibiting resilience. In Asia, Japan’s Nikkei rose 0.46%, led by gains in chip-related shares, while Taiwan’s tech-heavy benchmark rallied 1.17%. Hong Kong’s Hang Seng also joined the positive momentum with a 0.49% gain, driven by outperformance in tech shares.
However, mainland Chinese blue chips experienced a slight dip, and Australia’s resource-heavy benchmark slipped by 0.13%. Nomura Securities strategist Naka Matsuzawa expressed caution, suggesting that equities might be approaching a peak.
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The market had previously interpreted bad economic news as good news, anticipating a pause in Fed rate hikes. However, Matsuzawa notes that with the Treasury market already factoring in a pause, the stock market rally may face challenges.
Moody’s announcement on Friday downgrading the U.S. credit rating to “negative” from “stable” didn’t significantly sway the market’s attention. Investors remain focused on upcoming economic data, particularly U.S. consumer prices and retail sales scheduled for Tuesday and Wednesday, respectively.
In the energy sector, crude oil prices eased on Monday amid concerns about demand outweighing supply worries. Brent crude futures for January dipped by 0.4% to $81.08 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for December were down 0.5% at $76.82.
Both benchmarks had experienced a 2% gain on Friday, driven partly by Iraq’s support for oil cuts by OPEC+. As the week unfolds, market watchers will keep a keen eye on these dynamic trends shaping the Asian markets.
Our Reader’s Queries
What are Asian markets doing right now?
The Nikkei Index, Hang Seng Index, and S&P BSE SENSEX Index are all trading lower. The Nikkei Index is down 75.45 points at 33,464.17, the Hang Seng Index is down 142.14 points at 16,646.41, and the S&P BSE SENSEX Index is down 535.88 points at 71,356.60.
Why are US stocks surging?
The stock market experienced a significant surge following the Federal Reserve’s recent policy update. The update included projections for an additional interest rate cut in 2024, which exceeded initial expectations. This news caused stocks to soar, indicating a positive outlook for investors.
Why is Asian market down?
The Asian markets followed Wall Street’s downward trend today, causing a decline in last year’s gains. The shares dropped, reflecting the slump that Wall Street experienced at the start of 2024. U.S. futures were also lower, while oil prices remained relatively stable.
Why is there a stock market spike?
On Thursday, the Federal Reserve acknowledged that inflation is easing and announced its plan to cut rates three times in 2024. This news caused a surge in the stock market. The bond market also experienced a boost on Wednesday, thanks to the Fed’s unexpectedly favorable stance. The yields for 10-year U.S. Treasury bonds dropped below 4% for the first time since August.