Asian Stocks Pause: Asian stocks, after a robust 3% gain last week, took a breather as optimism about a potential end to U.S. rate hikes tempered. The MSCI Asia-Pacific index, which hit its highest since September on Tuesday, slipped 0.2% in early trade on Wednesday. This follows the S&P 500 snapping a five-session winning streak, falling 0.2%. Despite chipmaker Nvidia reporting strong revenue, shares dipped due to a cautious outlook on China sales.
Japan’s Nikkei, however, managed to rise by 0.5%, showcasing the mixed sentiment in the region. Nasdaq futures and S&P 500 futures also registered slight declines early in the Asia day, with the market anticipating lighter volumes throughout the week due to the upcoming U.S. Thanksgiving holiday on Thursday. Nomura’s chief macro strategist, Naka Matsuzawa, noted, “It appears that the short cover rally that began after the November (Fed meeting) is winding down and that buying and selling is beginning to alternate.”
The Federal Reserve’s release of minutes from the recent meeting didn’t provide new information according to traders, as policymakers reiterated a commitment to proceed carefully. Ten-year Treasury yields, which have fallen about 50 basis points since the Fed’s decision to hold rates steady early in the month, were marginally lower at 4.40% in Asia trade.
Interest rate futures markets currently see almost no chance of the Fed hiking again, pricing in about 90 basis points of rate cuts through 2024. This outlook suggests a 30% chance of rate cuts beginning as soon as March. Rabobank’s senior U.S. strategist, Philip Marey, commented, “Since the (Fed) believes that a soft landing is in sight, it would be foolish to risk it by hiking further than necessary.”
In foreign exchange markets, the dollar, which had been sliding since last week’s benign U.S. inflation report, found support and steadied overnight. It lifted from multi-month lows against several peers, maintaining a steady position against the euro and the yen in early Wednesday trade.
Also Read: Asian Stocks Waver as Global Interest Rates Peak in Uncertain Markets
Jonathan Petersen, senior economist at Capital Economics, highlighted the expectation for bond yield gaps to remain a tailwind for the yen and renminbi. He noted, “Prospects for the yen look particularly promising, with risks skewed towards the (Bank of Japan) again being an outlier in monetary policy, but this time raising its policy rate when most other major central banks are cutting.”
China’s yuan, which had gained 2% in the past week and led Asian currencies higher against the dollar, steadied at 7.1356 at the open of onshore trade. Reports indicated that major state-owned Chinese banks have been actively buying yuan to accelerate its recovery. On the data front, bellwether Singapore’s economy grew faster than initial estimates in the third quarter, supported by a resurgence in tourism. Later on Wednesday, Reserve Bank of Australia Governor Michele Bullock is scheduled to make a speech, and U.S. jobless claims data is expected.
In commodity markets, Brent crude futures hovered just above their 50-day moving average at $82.64 a barrel. Singapore iron ore futures, up more than 10% for the month, held at $131 a tonne. The cryptocurrency market saw Bitcoin wobbling lower to $36,163. This dip coincided with Binance chief Changpeng Zhao stepping down and pleading guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the crypto exchange.
As Asian markets take a pause, the landscape is marked by a nuanced interplay of factors. Investors are recalibrating their expectations regarding U.S. rate hikes, finding support for the dollar, while keeping a close eye on key economic indicators and geopolitical developments. The coming days, with lighter trading volumes ahead of the U.S. holiday, will likely provide further insights into how markets navigate this period of uncertainty.
Our Reader’s Queries
What is the Asian stock market doing right now?
The Nikkei Index is currently trading higher at 34,386.79, up by 623.61 points. On the other hand, the Hang Seng Index is trading lower at 16,170.97, down by 19.05 points. Meanwhile, the S&P BSE SENSEX Index remains unchanged at 71,386.21. These are the latest updates from the top Asian markets.
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 Chinese stock market falling?
The MSCI China Index reports that Chinese stocks reached their highest point in early 2021, but have since plummeted by nearly 60%, landing them in a bear market. This significant decline can be attributed to a number of factors, including a real estate debt crisis, a decrease in consumer confidence, and China’s slowing economy.
Why is the Hang Seng down?
On Monday, Asian stocks experienced a significant decline, with Hong Kong’s Hang Seng Index reaching its lowest point of the year. The market’s downturn is largely attributed to concerns over China’s ability to recover from a slowdown that has impacted various sectors, including technology and real estate.