Asian stocks rose on Friday, trying to compensate for a lackluster start to 2025, while the dollar hit a two-year high against a basket of currencies as investors feared that rates of American interest will no longer remain on the rise for long.
MSCI’s broadest index of Asia-Pacific stocks outside Japan was up 0.33%, but on track to record a decline of almost 1% for the week. The index is up almost 8% in 2024. Japanese markets are closed for the week.
Chinese stocks remained steady on Friday after falling on Thursday, underscoring growing concerns about China’s economy and a possible looming trade war when Donald Trump begins his U.S. presidency this month.
China’s blue-chip CSI 300 index was up 0.16 in early trading after recording its weakest start to the New Year since 2016 on Thursday. Hong Kong’s Hang Seng index rose 0.19%.
“Stocks had a tough time at the turn of the year, but strange things can happen in illiquid markets,” said Ben Bennett, Asia-Pacific investment strategist at Legal and General Investment Management.
“I don’t think we should extrapolate this performance. That said, a stronger dollar and higher bond yields will weigh on sentiment going forward and stock investors are hoping that changes soon.”
On Wall Street, U.S. stocks closed broadly lower on Thursday after initial gains failed to hold. Tesla shares fell 6.1% after reporting its first annual drop in deliveries, [.N]
The gloomy mood follows a shaky end to 2024, undermining a year-long rally fueled by growth expectations surrounding artificial intelligence, anticipated Federal Reserve rate cuts and, most recently, the likelihood of deregulatory policies from the incoming Trump administration.
But last month, the Fed shook markets with fewer rate cuts than expected and growing concerns about the inflationary nature of Mr. Trump’s policies sent bond yields higher, boosting the dollar and hurting bonds. actions.
Vasu Menon, managing director of investment strategy at OCBC, said Mr Trump’s pro-growth, pro-business agenda could boost the US economy, but could prove difficult for the rest of the world. world due to possible customs duties and a stronger dollar.
“There is therefore a certain degree of caution and anticipation in the markets, especially after the strong investment performance over the last two years,” Mr Menon said.
Overnight data showed the number of Americans filing new claims for unemployment benefits fell to an eight-month low of 211,000 last week, pointing to low layoffs at the end of 2024 and is consistent with a healthy labor market.
This bodes well for the US economy, with wage and inflation data later in the month likely to be the focus of investors’ attention in assessing the extent to which the tapering approach of Fed rates is likely to be measured.
Operators are counting on an easing of 44 basis points this year, less than the 50 basis points planned by the American central bank in December.
The Dollar Index, which measures the American currency against six other units, therefore stood at 109.2, just below its highest level in two years, at 109.54, reached on Thursday. The index rose 7% in 2024 as traders adjusted their interest rate expectations.
The euro was one of the biggest losers against a towering dollar, falling 0.86% in the previous session to a more than two-year low of $1.022475. It was at $1.0269 in Asian hours on Friday, heading for a 1.6% weekly decline, the worst since November. [FRX/]
The yen strengthened slightly to 157.295 per dollar, but is not far from a more than five-month low of 158.09 per dollar reached in December. The yen fell more than 10% last year, its fourth straight year of losses.
In the commodities sector, oil prices rose slightly on optimism about China’s economy and fuel demand following President Xi Jinping’s promise to promote growth.
Brent oil futures rose 0.16% to $76.05 a barrel, while West Texas Intermediate oil rose 0.18% to $73.25 a barrel.
The price of gold remained stable at $2,658 per ounce, following a 27% rise in 2024, its strongest annual performance since 2010. [GOL/]
