Asian stock markets saw significant gains on Tuesday, driven by a strong performance in the technology sector, which followed Wall Street’s record highs overnight. Meanwhile, the U.S. dollar regained some of its lost ground against major currencies as traders evaluated the future of U.S. interest rates.
The political crisis in France, which threatened the stability of the government, left the euro near a one-week low. The Chinese yuan faced downward pressure, falling to a 13-month low amid growing concerns over additional U.S. tariffs on China.
In Asia, Japan’s Nikkei rose 2.2% in afternoon trading, while South Korea’s KOSPI advanced 1.8%. Taiwan’s market gained 1.4%. Australia’s benchmark index climbed 0.6%, reaching a fresh all-time high, and Singapore’s Straits Times index surged over 1%, hitting a 17-year peak.
However, China’s stock markets showed mixed results. Hong Kong’s Hang Seng managed only a modest 0.1% rise, while mainland blue-chip stocks dropped by 0.4%. The MSCI Asia-Pacific index rose by 1%.
U.S. stock futures pointed slightly higher, reflecting the optimism of the previous day’s performance, led by strong gains in tech stocks. Meta Platforms surged nearly 19%, and Tesla rose by 12%, contributing to a continued bull run. Chris Weston, head of research at Pepperstone, noted, “Equity hedges have been unwound, signaling a market confident of further gains into the year-end.”
The positive momentum was particularly driven by Microsoft and Meta, two of the “Magnificent 7” high-tech stocks, which also include Google parent Alphabet, Amazon, Apple, and Nvidia.
Despite political turbulence in France, pan-European STOXX 50 futures climbed 0.4%.
In the currency markets, the U.S. dollar gained 0.4%, rising to 150.10 yen after hitting a low of 149.09 yen on Monday, its weakest level since late October. The dollar’s recovery was aided by stronger-than-expected U.S. manufacturing data, which also showed a slowdown in price increases. However, the dollar came under renewed pressure following remarks from Federal Reserve Governor Christopher Waller, who expressed leaning toward a rate cut at the Fed’s upcoming December meeting. Traders now see a 75% chance of a quarter-point cut, up from 66% the day before.
The two-year U.S. Treasury yield dipped to 4.1877%, approaching a four-week low. Traders are also awaiting the release of JOLTS job openings data later Tuesday, ahead of the U.S. payrolls report due Friday.
The yen has gained support from speculation that the Bank of Japan may raise interest rates by a quarter point at its Dec. 19 meeting, with market odds now at about 58%. Tony Sycamore, an analyst at IG, stated that the USD/JPY could see a deeper decline if the BOJ hikes rates while the Fed cuts.
The euro eased by 0.1% to $1.0489, after a 0.7% drop on Monday. French political turmoil, marked by no-confidence motions against Prime Minister Michel Barnier, weighed on the single currency.
The British pound also fell by 0.1% to $1.2646, while the Chinese yuan sank to 7.3145 per dollar, its lowest since November 2023.
U.S. President-elect Donald Trump’s weekend remarks adding pressure to BRICS nations, including China, over their stance on the dollar, further contributed to currency volatility. Trump demanded that BRICS nations avoid creating or backing an alternative currency to the dollar, threatening 100% tariffs if they failed to comply.
Gold prices remained near $2,640 per ounce, continuing to retreat from its all-time high in October. Meanwhile, oil prices held steady near two-week lows, with traders awaiting an OPEC+ meeting later this week. Brent crude added 12 cents to $71.95 per barrel, and U.S. West Texas Intermediate crude rose 5 cents to $68.15 per barrel.
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