Asian currencies hit a near two-decade low against the dollar, while equities saw mixed movements, reflecting investor caution. Gains in the chip sector were countered by losses in Japan, highlighting the region’s sensitivity to geopolitical and economic shifts.
Tech Sector Provides Momentum
Benchmarks in Taiwan and South Korea edged higher, bolstered by technology firms like SK Hynix Inc. This uptick followed Microsoft Corp.’s announcement of an $80 billion investment in data centers, which fueled optimism across the chip industry. Hon Hai Precision Industry Co., also known as Foxconn, saw a rally after reporting better-than-expected revenue. The company, a key partner for Nvidia Corp. and Apple Inc., was a standout performer.
Japan Faces Setbacks
In Japan, the Topix index declined, driven by a slump in Nippon Steel Corp. shares. This drop came after U.S. President Joe Biden blocked the company’s proposed $14.1 billion acquisition of United States Steel Corp.
Geopolitical Tensions Loom
The mixed performance in Asian markets underscores investor wariness amid U.S.-China trade tensions. While Beijing’s economic stimulus measures and optimism around AI provide some upward pressure, the threat of escalating tariffs casts a shadow over sustained gains.
Currency Movements Reflect Unease
The yen led losses among Group-of-10 currencies, continuing its decline against the dollar. Meanwhile, the Canadian dollar briefly strengthened following a report suggesting Prime Minister Justin Trudeau might resign as leader of the Liberal Party. Analysts, however, predict limited upside for the loonie due to broader bearish trends.
China’s central bank continued to support the yuan through its daily reference rate after the currency breached a critical threshold last week.
Monetary Policy Outlook
Goldman Sachs analysts predict widespread interest rate cuts across most Asian economies in 2025, except Japan, where sustained reflation is expected to lead to further rate hikes.
China’s Economic Pulse
China’s services sector expanded at its fastest pace since May, according to a private survey, signaling robust domestic demand following Beijing’s aggressive stimulus measures.
Global Developments and Market Drivers
U.S. Market Indicators: Federal Reserve Governor Lisa Cook and Richmond Fed President Thomas Barkin are set to deliver remarks, providing insight into the Fed’s policy direction. Treasury yields rose for a second consecutive session, nearing their highest levels since May.
Energy and Commodities: WTI crude extended its winning streak to six days, marking its longest rally since April. Gold prices also climbed as investors sought safe-haven assets.
Key Data Releases: This week features a series of pivotal events, including Eurozone inflation and U.S. nonfarm payroll data. Investors will closely watch these indicators for clues on global economic momentum.
Market Snapshot
Stocks:
- S&P 500 futures remained steady as of 12:40 p.m. Tokyo time.
- Japan’s Topix fell 1.1%, while Hong Kong’s Hang Seng dipped 0.2%.
- The Euro Stoxx 50 futures rose 0.3%, signaling optimism in European markets.
Currencies:
- The Japanese yen weakened 0.3% to 157.69 per dollar.
- The offshore yuan hovered at 7.3556 per dollar, showing little movement.
Cryptocurrencies:
Bitcoin and Ether each rose 0.7%, trading at $99,183.45 and $3,671.52, respectively.
Bonds and Commodities:
- U.S. 10-year Treasury yields rose to 4.62%, while Australia’s 10-year yield climbed to 4.46%.
- WTI crude settled at $73.87 per barrel, with spot gold remaining steady.
This week’s packed economic calendar and geopolitical developments will likely shape the trajectory of global markets in the days ahead.
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