Asian stocks were mixed on Monday, following a broad decline in global equities on Friday as Wall Street closed the week on a negative note.
U.S. futures indicated a lower opening, while oil prices showed minimal movement.
South Korea’s Political and Market Turmoil
In South Korea, the Kospi index rose 0.6% to 2,418.80, buoyed by gains in some sectors. However, shares of Jeju Air Co. plummeted 8.8% following a tragic incident involving one of the airline’s jets. The aircraft, which experienced landing gear failure, skidded off the runway, crashed into a concrete fence, and caught fire. The accident, which occurred on Sunday, resulted in the deaths of 179 people.
Political unrest also remained a focal point in South Korea. Law enforcement officials applied for a court warrant on Monday to detain impeached President Yoon Suk Yeol. The investigation centers on whether his martial law decree on December 3 could be classified as rebellion, adding to the country’s political turbulence.
Japan and Hong Kong Close the Year with Mixed Results
In Japan, the Nikkei 225 index lost 0.9%, closing at 39,914.21. The market was affected by a stronger U.S. dollar against the Japanese yen, which traded at 157.83 yen, up slightly from 157.75 yen. Japan’s stock market is winding down for the year, with trading to conclude as the nation prepares for its New Year holidays, the country’s most significant cultural event.
Hong Kong’s Hang Seng index fell by 0.3%, ending at 20,030.63, while China’s Shanghai Composite gained 0.3% to 3,408.72. In Australia, the S&P/ASX 200 dipped 0.9% to 8,191.50.
U.S. Market Update: Retailers and Tech Stocks Lead Losses
The broader U.S. market closed lower on Friday, with the S&P 500 dropping 1.1% to 5,970.84. Despite this, the index managed to retain a modest 0.7% gain for the week, supported by strong performance earlier in the week. The Dow Jones Industrial Average declined 0.8% to 42,992.21, and the Nasdaq Composite fell 1.5% to 19,722.03.
A significant contributor to the losses was a sharp drop in shares of major tech companies, particularly the “Magnificent 7″—Apple, Microsoft, Amazon, Google’s parent Alphabet, Meta, Tesla, and Nvidia. These tech giants exert a disproportionate influence on market movements due to their large market capitalizations.
Retail stocks also experienced declines, with Amazon and Best Buy both losing 1.5%. The performance of retailers is under close scrutiny, with analysts watching for signs of consumer behavior during the critical holiday shopping period.
Economic Data and Market Outlook
Despite the losses on Friday, the overall outlook for 2024 remains positive. The S&P 500 is on track for a gain of around 25% by year-end, marking a second consecutive year of growth above 20%, a feat not seen since 1997-1998.
The gains have been supported by strong economic data, with consumer spending continuing to show resilience and the labor market staying robust. Inflation, though still elevated, has been gradually easing, providing relief to markets.
However, economic reports released on Friday showed a 0.2% decline in wholesale trade sales and inventories for November, following a modest gain in October. This weaker-than-expected data, coupled with a stable unemployment claims report, hinted at a potential slowdown in some sectors.
The Federal Reserve’s interest rate cuts this year have also been a key driver for market optimism. The central bank recently implemented its third rate cut of 2024, as easing inflation provided more room for policy adjustments. However, concerns persist that inflation could resurge, tempering expectations for further rate cuts in 2025.
Concerns Over Future Economic Policy and Inflation Risks
Looking ahead, uncertainties remain regarding the path of the U.S. labor market and the potential impact of shifting economic policies under incoming President Donald Trump. Speculation is growing that Trump’s approach to tariffs and other economic measures could lead to higher inflation, increased government debt, and disruptions to global trade, adding to market volatility.
Oil Prices and Currency Movement
In commodities, U.S. benchmark crude oil rose by 1 cent to $70.61 per barrel, while the international standard, Brent crude, fell by 1 cent to $73.78 per barrel.
The euro slipped slightly against the U.S. dollar, trading at $1.0427, down from $1.0433 earlier in the day.
As global markets navigate a complex mix of political instability, economic data, and geopolitical tensions, investor sentiment remains cautious heading into the final days of 2024.
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