Asian Stock Markets Rise Amid Year-End Optimism

On Tuesday, 26th December 2024 most of the US stocks were at a vulnerable position as Asian stock markets saw gains, driven by hopes for a strong finish to the year. At the same time, Treasury prices dropped because fewer investors were seeking safe options.

According to Yahoo Finance, the yield on 10-year Treasury notes rose by two basis points to 4.61% ahead of the US’s $44 billion seven-year note auction on Thursday. Meanwhile, the dollar showed a mixed performance against its Group-of-10 counterparts.

Since 1950, the S&P 500 has delivered an average and median return of 1.3% during the “Santa Claus” period, significantly outperforming the typical seven-day market gain of 0.3%, according to Adam Turnquist of LPL Financial.

Asian Stock Market Sees Broad Gains

Asian shares gained globally through the entire week, as optimism that inflationary pressures are ebbing in major economies and that China’s property sector is stabilizing boosted investor sentiment. The MSCI Asia-Pacific Index, which is considered the leading measure of Asian stocks, advanced 0.7% in morning trading, with tech-heavy South Korea and Taiwan among the market leaders. Japan’s Nikkei 225 stepped up as export-oriented sectors such as automobiles and electronics led the way.

China’s Shanghai Composite added 0.5%, while Hong Kong’s Hang Seng Index jumped 1.2%, driven by a rebound in property and tech shares. Forecasters regard the upturn as a sign of revived credibility in Beijing’s efforts to steady the nation’s economic growth, while geopolitical risks remain a consideration.

Jun Rong Yeap, a market strategist at IG Asia Pte in Singapore said, “A follow-through from pre-Christmas momentum will mean a continued drift higher for Asian markets. Weakness in the yen on the back of recent Fed-BOJ policy divergence has offered some support for Japanese equities in today’s session, coupled with the year-end positive seasonality around the Santa Claus rally.”

US Futures Hold Steady

US stock futures continue to trade low due to the prevailing pre-earnings and macroeconomic releases sentiment, such as the GDP of the United States and the inflation rate. The probable halt in the rally that has been seen in the recent closing prices for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite futures could be seen Friday’s barely move.

The low activity in US markets shows that investors are now on the lookout globally and particularly the Asian markets as the global market themes remain dominant. Since the Federal Reserve has recently come out with a slightly more aggressive stance on interest rates, the market participants are trying to follow a number of economic signals in order to anticipate future monetary policy.

Global Market Trends in Focus

Other global market trends suggest that the markets around the world are interconnected. Asian shares have risen slightly this week, easing pressures felt by global markets on the back of geopolitical risks and slowing growth. They have pointed seriously at risks primarily in inflation, central banks’ policies, and corporate earnings’ volatility.

Oil prices also ticked a notch up attributed to the better sentiment on risk in the global markets. Brent crude advanced by 0.6% to $81.30 per barrel and WTI by 0.5% to $76.50 per barrel. The strengthening energy market is additional evidence of enhancing sentiment within the global equities.

Matt Maley at Miller Tabak, “The action of the past few weeks shows that the big-cap tech names are still the key leadership group. These big-tech names are highly overweighted in the portfolios of a huge number of institutional investors. Any buying they do over the next week is likely to be concentrated in these names.”