Mixed Asian Markets as U.S. Stocks Hit Record Highs

by Yuki

Asian shares displayed mixed performance on Monday following a record-setting week for U.S. stocks. Futures for U.S. markets also reflected this mixed sentiment, while oil prices increased.

In Hong Kong, the Hang Seng index dropped by 1.5% to 20,869.39, contrasting with a 0.2% gain in Shanghai’s Composite index, which reached 3,268.11. Meanwhile, the Shenzhen A-share index saw a rise of 1.6%.

China’s recent decision to lower its one-year and five-year Loan Prime Rates aims to ease borrowing pressures, particularly for property developers affected by a crackdown on excessive lending. However, analysts note that any positive impact on market sentiment may be short-lived. Zichun Huang of Capital Economics emphasized that, given weak demand, substantial improvement would rely heavily on increased government spending. The Finance Ministry has committed to enhancing fiscal outlays in the upcoming months, although skepticism remains about the effectiveness of these measures.

In Japan, the Nikkei 225 index edged down 0.1% to 38,954.60. Conversely, the Kospi in Seoul rose 0.4% to 2,604.92, and Australia’s S&P/ASX 200 closed 0.7% higher at 8,344.40.

Oil prices rebounded after last week’s declines, driven by reduced concerns over potential Israeli strikes on Iranian oil facilities, which could significantly impact crude exports to China and elsewhere. As of early Monday, U.S. benchmark crude rose by 52 cents to $69.21 per barrel, while Brent crude increased by 41 cents to $73.47 per barrel.

Currency markets saw the dollar strengthen to 149.78 Japanese yen from 149.57 yen late Friday, reflecting expectations of a slower pace of interest rate hikes by the Bank of Japan. The euro also slipped to $1.0856 from $1.0866.

On Wall Street last Friday, all three major indices recorded new highs. The S&P 500 climbed 0.4% to close at 5,864.67, surpassing its earlier record. The Dow Jones Industrial Average rose 0.1% to 43,275.91, while the Nasdaq composite increased by 0.6% to 18,489.55.

Overall trading on Wall Street remained stable, marking the S&P 500’s sixth consecutive week of gains—the longest winning streak of 2024. Positive economic data has fueled optimism that the U.S. economy may avoid a severe recession, despite the ongoing inflationary challenges. With the Federal Reserve expected to cut interest rates by a quarter percentage point in its November meeting, market expectations have shifted away from earlier predictions of a more substantial rate reduction. The current federal funds rate stands between 4.75% and 5%.

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