Shares in Asia declined on Tuesday following a record-setting performance by the Nasdaq, ahead of a key Federal Reserve meeting later this week that could shape market trends for the upcoming year.
U.S. futures dropped, and oil prices reversed earlier losses.
Tokyo’s Nikkei 225 index fell by 0.2%, closing at 39,364.68. Technology stocks, including SoftBank Group Corp., helped cushion the decline. The Japanese tech and telecom giant’s shares surged 4.4% after CEO Masayoshi Son, alongside President-elect Donald Trump, announced plans for a $100 billion U.S. investment over the next four years.
Chinese stocks extended their losses, with Hong Kong’s Hang Seng index slipping 0.1% to 19,773.60 and the Shanghai Composite falling 0.7% to 3,361.49. “Recent disappointing data in China is intensifying pressure on domestic policymakers to introduce further stimulus measures to support domestic demand,” said Stephen Innes of SPI Asset Management.
South Korea’s Kospi dropped 1.3% to 2,456.81 as political tensions escalated. Authorities moved to summon impeached President Yoon Suk Yeol for questioning over his controversial martial law decree. The country’s Constitutional Court began proceedings to decide whether Yoon should be removed from office or reinstated.
Meanwhile, Australia’s S&P/ASX 200 rose 0.8% to 8,314.00. Taiwan’s Taiex index edged down 0.1%, while Bangkok’s SET index fell 0.8%.
On Monday, U.S. stock markets saw mixed results. The S&P 500 rose 0.4% to 6,074.08, and the Nasdaq Composite climbed 1.2% to a record close of 20,173.89. However, the Dow Jones Industrial Average lagged, losing 0.3% to 43,717.48. Broadcom’s strong performance, with an 11.2% gain, was a highlight, driven by the company’s upbeat profit report and growing enthusiasm around its artificial intelligence products.
This Wednesday, the Federal Reserve is set to announce its final interest rate decision for the year. A third consecutive rate cut is widely anticipated as the Fed aims to support a weakening job market after successfully reducing inflation to near the 2% target.
The key question is how much further the Fed will cut rates next year. The Fed’s projections for the federal funds rate through 2025, along with other economic indicators, will be revealed. Fed Chair Jerome Powell will also address the media during a post-meeting press conference.
Expectations of rate cuts have been a driving force behind the S&P 500’s record-setting performance in 2023, with the index hitting all-time highs 57 times. Despite rate hikes earlier in the year, the economy has remained resilient, continuing to grow despite inflationary pressures that reached over 9% two summers ago.
In cryptocurrency news, MicroStrategy’s stock surged by 7% as it continues to benefit from the rising price of bitcoin, which reached a new all-time high of $107,000 on Monday, according to CoinDesk. Bitcoin, which started the year at around $44,000, was trading at $106,884 early Tuesday, driven in part by expectations that Trump will support digital currencies.
Treasury yields remained relatively stable. The 10-year yield edged down to 4.39%, while the two-year yield, closely tied to Fed expectations, eased to 4.24%.
In commodity markets, U.S. benchmark crude oil rose by 6 cents to $70.77 per barrel, while Brent crude climbed 18 cents to $73.70 per barrel.
The U.S. dollar weakened against the Japanese yen, falling to 154.07 yen from 154.14 yen. The euro also dropped slightly to $1.0509 from $1.0513.
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