Asian Markets Rally Following Positive Momentum from U.S. Stocks
Asian stock markets exhibited a positive trend on Monday as they reacted to a robust performance by U.S. indices, which concluded their most successful week in two months. Futures in the U.S. and oil prices remained relatively stable during this period.
In Hong Kong, the Hang Seng Index surged by 2.3%, reaching 20,041.09 points, buoyed by the People's Bank of China's decision to maintain its primary lending rates. Meanwhile, the Shanghai Composite Index saw a modest increase of 0.5%, settling at 3,257.24 points. A local court in Hong Kong has extended the deadline for the financially troubled property developer, Country Garden, to negotiate with its creditors, offering a glimmer of hope in the sluggish real estate sector.
Investor sentiment was further bolstered by optimistic remarks from officials in both the U.S. and China, coinciding with the inauguration of President-elect Donald Trump. Both parties expressed a commitment to enhance bilateral relations, which may alleviate some apprehensions regarding escalating trade tensions and potential tariff increases on Chinese goods exported to the U.S.
Japan's Nikkei 225 index climbed by 451.04 points, or 1.17%, closing at 38,902.50. The U.S. dollar experienced a slight decline against the Japanese yen, trading at 156.02 yen, down from 156.31 yen. Analysts are speculating that the Bank of Japan may opt to raise interest rates during its upcoming monetary policy meeting, which typically strengthens the yen's value against the dollar.
In currency markets, the euro appreciated to $1.0304, up from $1.0281, reflecting a broader trend in the forex market.
South Korea's Kospi index remained nearly unchanged at 2,524.12 points, while Australia's S&P/ASX 200 advanced by 0.5%, reaching 8,354.90. Taiwan's Taiex increased by 0.5%, and India's Sensex saw a modest rise of 0.2%. The Stock Exchange of Thailand's SET index also gained 0.3% during this trading session.
In the commodities market, U.S. benchmark crude oil prices dipped slightly by 2 cents to $77.37 a barrel, while Brent crude, the global standard, decreased by 13 cents to $80.66 a barrel.
On the previous Friday, the S&P 500 index rose by 1% to 5,996.66, marking its first positive week in three. The Dow Jones Industrial Average increased by 0.8% to 43,487.83, and the Nasdaq composite surged by 1.5% to 19,630.20. A significant contributor to this market rally was SLB, a provider of oilfield services, which reported profits and revenues exceeding analysts' expectations for the end of 2024, resulting in a 6.1% stock price increase. The company also announced a 3.6% dividend increase and a $2.3 billion stock buyback plan to reward investors.
All major technology stocks, often referred to as the "Magnificent Seven," saw gains, including prominent companies such as Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. Due to their substantial market capitalization, the movements of these stocks significantly influence the S&P 500 and other indices.
Recently, these tech stocks faced pressure due to concerns over inflated valuations following years of strong market leadership. These concerns were exacerbated by rising Treasury yields in the bond market, which tend to negatively impact the prices of high-valuation stocks.
However, the stock market received a boost this week from encouraging inflation data from the U.S., raising expectations that the Federal Reserve may implement further interest rate cuts this year. Such cuts, which began in September, would stimulate the economy and potentially drive up asset prices, although they could also contribute to inflationary pressures.
Wall Street has experienced considerable volatility in recent weeks as economic reports have led to fluctuating expectations regarding the Federal Reserve's monetary policy. Recent easing of inflation concerns has resulted in declining Treasury yields and rising stock prices, whereas increasing inflation worries have had the opposite effect.
The yield on the 10-year Treasury bond fell further to 4.61%, down from 4.62% the previous day, and significantly lower than 4.76% a week prior. Truist Financial also reported a 5.9% increase in stock price on Friday after posting better-than-expected profits for the fourth quarter of 2024, contributing to an overall positive sentiment in the banking sector.
In contrast, J.B. Hunt Transport Services experienced the largest decline in the S&P 500, dropping by 7.4% after reporting lower-than-expected profits, attributed in part to increased costs associated with equipment and insurance.
