Mixed Performance in Asian Markets Following Wall Street's Volatility
Asian equity markets displayed a mixed performance on Tuesday, reflecting the fluctuations observed on Wall Street. The U.S. markets experienced a blend of gains and losses, as rising oil and gas stocks helped to counterbalance declines in major technology firms.
The Nikkei 225 index in Japan fell by 2.0% to settle at 38,394.09 during afternoon trading, marking a return to the market after a holiday on Monday. Conversely, the Australian S&P/ASX 200 index rose by 0.5% to reach 8,231.00. In South Korea, the Kospi index increased by 0.3% to 2,497.95, while Hong Kong's Hang Seng index surged by 1.9% to 19,234.98. The Shanghai Composite Index also experienced a significant gain, rising by 2.1% to 3,227.11.
Market analysts noted that Japan's market was adjusting after the previous week's sell-off. The Finance Ministry of Japan reported a notable increase in the current account surplus, which rose to 3.4 trillion yen (approximately $21 billion) in November, reflecting a 54.5% increase year-on-year.
On Wall Street, the S&P 500 index managed a small gain of 0.2% after previously erasing losses of 0.9%. The Dow Jones Industrial Average recorded an increase of 358 points, or 0.9%. However, the Nasdaq composite index saw a decline of 0.4%, primarily due to the poor performance of major tech stocks.
Recent trends have shown that stocks have faced mounting pressure, with the S&P 500 experiencing its fourth losing week out of the last five. Investors have tempered their expectations regarding potential interest rate cuts from the Federal Reserve this year, which could stimulate the economy. Despite previous expectations for rate reductions, inflation remains above the Fed's target of 2%, and various reports indicate that the U.S. economy is stable enough to function without significant intervention.
High-interest rates are exerting downward pressure on various investments, particularly those considered overvalued. Notably, Nvidia shares fell by 2%, contributing significantly to the S&P 500's decline, despite the company's stock having previously increased nearly five-fold over the last three years due to the surge in artificial intelligence technology.
Other notable declines included Apple, which slipped by 1%, and Meta Platforms, which fell by 1.2%. These companies, being among the largest on Wall Street, exert considerable influence on the S&P 500's performance.
In contrast, Moderna experienced a sharp decline of 16.8% after the company provided a revenue forecast for the upcoming year that failed to meet analyst expectations. The vaccine manufacturer is also implementing cost-cutting measures in response to a slowdown in COVID-related sales.
Macy's shares dropped by 8.1% after the retailer projected that its revenue for the final quarter of 2024 would likely be at or slightly below the lower end of its previously issued forecast range. Edison International saw a further decline of 11.9% as wildfires continued to affect its Southern California Edison utility, with investigations underway regarding its equipment's possible involvement in the ignition of the Hurst fire.
On a positive note, oil and gas companies saw gains following an increase in oil prices. On Monday, U.S. crude oil prices rose by 2.9% to $78.82 per barrel, while Brent crude increased by 1.6% to $81.01. This movement followed the Biden administration's announcement of expanded sanctions against Russia's energy sector. As a result, Exxon Mobil's shares rose by 2.6%, and Valero Energy jumped by 4.9%.
By Tuesday afternoon in Asia, benchmark U.S. crude had slightly decreased by 38 cents to $78.44 per barrel, while Brent crude fell by 47 cents to $80.54 per barrel.
In a notable market development, shares of U.S. Steel surged by 6.1% after the Biden administration extended the deadline for the company to divest its proposed acquisition by Japan's Nippon Steel until June. Intra-Cellular Therapies experienced a remarkable increase of 34.1% after Johnson & Johnson announced its intention to acquire the biopharmaceutical company for $132 per share in cash. Johnson & Johnson's shares rose by 1.7% in connection with this news.
Overall, the S&P 500 increased by 9.18 points, reaching 5,836.22, while the Dow Jones Industrial Average rose by 358.67 points to 42,297.12. The Nasdaq composite index declined by 73.53 points, settling at 19,088.10.
In the bond market, Treasury yields continued to rise, with the yield on the 10-year Treasury note increasing to 4.78%, up from 4.76% late Friday. This rise in yields has been persistent over the past month, and it was notably lower at 3.65% in September.
Should Treasury yields continue to climb, it will necessitate either a fall in stock prices or significant profit growth from companies to maintain investor interest.
In currency markets, the U.S. dollar strengthened to 157.58 Japanese yen from 157.26 yen, while the euro traded at $1.0252, down from $1.0274.
