Asian Stocks Eye Gains as Wall Street Awaits Data: Markets Wrap
Asian stocks are set to follow the positive lead from Wall Street where a rally in the world’s largest technology companies drove stocks to fresh all-time highs.
(Bloomberg) -- Asian stocks are set to follow the positive lead from Wall Street where a rally in the world’s largest technology companies drove stocks to fresh all-time highs.
Futures show benchmarks in Tokyo, Shanghai and Sydney are set to rise at the open, while Hong Kong looks flat. Currency markets are in the spotlight, with the dollar snapping a three-day losing streak after President-elect Donald Trump’s warning to BRICS nations. French bonds and stocks came under renewed pressure while the euro fell as much as 1.1% amid the nation’s political turmoil.
In the US, the S&P 500 notched its 54th closing record this year in a “narrow” advance that saw just a few groups ending higher. The tech-heavy Nasdaq 100 rose more than 1%, Tesla Inc. led gains in megacaps and Apple Inc. hit a fresh peak.
Traders are bracing for a barrage of economic data and remarks from Federal Reserve speakers that will help shape the outlook for interest rates. Treasuries pared losses on Monday after Fed Governor Christopher Waller said he’s inclined to vote for a rate cut in December, with swaps pricing in more than 70% of a quarter-point cut this month.
The highlight this week is Friday’s payrolls report, which is expected to show US hiring jumped in November after hurricanes and a major strike undercut job growth a month earlier. On Wednesday, Fed Chair Jerome Powell participates in a moderated discussion, and investors will await any assessment of the job market and inflation as well as clues to whether the central bank will lower rates in December.
“This week is the last truly important economic data week of 2024,” said Tom Essaye at The Sevens Report. “If results are ‘Goldilocks,’ then investors will expect a soft landing and a December rate cut.”
The S&P 500 added 0.2%. The Nasdaq 100 rose 1.1%. The Dow Jones Industrial Average fell 0.3%. Treasury 10-year yields advanced two basis points to 4.19%.
In a move that escalated a campaign to contain Beijing’s technological ambitions, but stopped short of earlier proposals that would have sanctioned more key Chinese firms, the US unveiled new restrictions on China’s access to vital components for chips and AI.
The Department of Commerce slapped fresh curbs on the sale of high-bandwidth memory chips made by US and foreign companies, likely affecting South Korea’s SK Hynix Inc. and Samsung Electronics Co. as well as Idaho-based Micron Technology Inc.
In China, investors hungry for signs of stimulus to boost the sub-par economy have been put on edge after the Communist Party’s elite decision-making body skipped releasing a readout for its regular November meeting. Investors are now turning their attention to this month’s Politburo assembly — one of three annually to normally focus on economic policy.
In Europe, Marine Le Pen pledged to topple Prime Minister Michel Barnier’s government after he failed to meet her demands on a new budget, threatening financial and political disruption for France.
Buoyant Mood
Back on Wall Street, the mood remains buoyant. The Fed’s Waller said he’s inclined to vote for another reduction in interest rates when officials meet later this month, though data due before then could make the case for holding them steady.
The optimism is in stark contrast to a year ago, when equity investors and strategists were bracing for a potentially turbulent 2024, worrying about the risk of a hard landing for the US economy and rate cuts that could come too late to prevent it. Few anticipated that the S&P 500’s annual gain would be among the best in history.
“We now find ourselves in the middle of this ‘Goldilocks’ zone, where economic health supports earnings growth while remaining weak enough to justify potential Fed rate cuts,” said Mark Hackett at Nationwide. “December continues the seasonal tailwind, historically delivering the second-best performance behind November. Other technical tailwinds for the market include financial conditions, sentiment, momentum, and breadth.”
December has usually been a stronger month when the market enters the month up solidly year-to-date, according to Bespoke Investment Group.
In the 22 years that the S&P 500 has been up more than 20% in the year through November, the index has averaged a gain of 1.77% in December — with positive returns 77.3% of the time, Bespoke noted. While the gauge has fallen in December just five of 22 times when it has been up over 20% through November, three of those five December drops came during election years (1936, 1980, 1996).
Corporate Highlights:
Key events this week:
Some of the main moves in markets:
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First Published:3 Dec 2024, 04:26 AM IST
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