Asian shares were mostly higher on Monday after Wall Street capped its eighth straight winning week with a quiet finish following reports showing inflation on the way down and the economy potentially on the way up. Tokyo’s Nikkei 225 added 0.3% to 33,254.03 and the Shanghai Composite index edged 0.1% higher, to 2,918.93. The Taiex in Taiwan gained 0.1% and Bangkok’s SET rose 0.1%. Most markets in the region and beyond were closed for the Christmas holiday.
Quick Read
- Rise in Asian Shares: Asian stock markets mostly advanced on Monday, with Tokyo’s Nikkei 225 increasing by 0.3% and the Shanghai Composite index slightly up by 0.1%. Gains were also seen in Taiwan and Bangkok, while most markets in the region were closed for the Christmas holiday.
- Chinese Online Game Industry Support: Chinese regulators approved over 100 online games and expressed support for the gaming industry, following draft guidelines that had initially caused shares of major game makers like Tencent and Netease to drop.
- Wall Street’s Performance: The S&P 500 closed up 0.2%, nearing its record high from nearly two years ago. The Dow Jones slightly fell, and the Nasdaq Composite gained 0.2%. The S&P 500 has seen its longest weekly winning streak since 2017.
- Economic Reports Impact: Economic reports showed a decrease in inflation, unexpected consumer spending rise, and mixed signals in other areas like durable goods orders, new home sales, and consumer sentiment. These reports caused fluctuations in Treasury yields.
- Federal Reserve’s Balancing Act: The Federal Reserve’s efforts to balance inflation control with economic growth are ongoing. Stronger-than-expected economic data could make this balance more challenging.
- Treasury Yields Status: The 10-year Treasury yield remained around 3.90%, down from October’s high of over 5%. Lower yields have contributed to the stock market’s recent gains.
- Market Expectations for Federal Reserve: Market traders anticipate the Federal Reserve may cut its main interest rate by at least 1.50 percentage points by the end of next year. The current federal funds rate is at its highest in over two decades.
- Currency Markets: The U.S. dollar fell slightly against the Japanese yen, while the euro increased marginally against the dollar.
The Associated Press ha the story:
Asian shares gain in quiet holiday trading after Wall St’s 8th winning week
Newslooks- BANGKOK (AP)
Asian shares were mostly higher on Monday after Wall Street capped its eighth straight winning week with a quiet finish following reports showing inflation on the way down and the economy potentially on the way up.
Tokyo’s Nikkei 225 added 0.3% to 33,254.03 and the Shanghai Composite index edged 0.1% higher, to 2,918.93. The Taiex in Taiwan gained 0.1% and Bangkok’s SET rose 0.1%.
Most markets in the region and beyond were closed for the Christmas holiday.
Chinese regulators announced approvals of more than 100 online games and issued a statement expressing support for the industry after draft guidelines issued Friday caused share prices of major games makers like Tencent and Netease to plunge.
On Friday, the S&P 500 rose 0.2% to sit less than 1% below its record set nearly two years ago, at 4,754.63. The Dow slipped less than 0.1% to 37,385.97, and the Nasdaq gained 0.2% to 14,992.97.
With its eight straight weekly gains, the S&P 500 is in the midst of its longest winning streak since 2017.
Wall Street’s focus was squarely on a suite of economic reports released Friday that led to some swings in Treasury yields.
The measure of inflation the Federal Reserve prefers to use slowed by more than economists expected, down to 2.6% in November from 2.9% a month earlier. It echoed other inflation reports for November released earlier in the month.
Spending by U.S. consumers unexpectedly rose during the month. While that’s a good sign for growth for an economy driven mainly by consumer spending, it could also indicate underlying pressure remains on inflation.
Other reports on Friday showed orders for durable manufactured goods strengthened more in November than expected, sales of new homes unexpectedly weakened and sentiment for U.S. consumers improved.
The Federal Reserve is walking a tightrope, trying to slow the economy enough through high interest rates to cool inflation, but not so much that it tips into a recession. A stronger-than-expected economy could complicate the balancing act.
The yield on the 10-year Treasury was at 3.90% early Monday, roughly its same level from late Friday. It is still down comfortably from October, when it was above 5% and putting painful downward pressure on the stock market.
Falling yields have been a primary reason the stock market has charged roughly 15% higher since late October. Not only do they boost the economy by encouraging borrowing, they also relax the pressure on the financial system and goose prices for investments. They’ve been easing on hopes that inflation has cooled enough for the Federal Reserve to cut interest rates through 2024.
Traders are largely betting the Federal Reserve will cut its main interest rate by at least 1.50 percentage points by the end of next year, according to data from CME Group. The federal funds rate is currently sitting within a range of 5.25% to 5.50% at its highest level in more than two decades.
In currency dealings, the U.S. dollar fell to 142.38 Japanese yen from 142.49 yen. The euro rose to $1.1029 from $1.1019.
