Asian Markets Show Varied Results, Following Wall Street’s Consistent Gains Amid Holiday Closures

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Monday saw a diverse performance in Asian stock markets after Wall Street completed its eighth consecutive week of gains. This outcome followed recent data indicating a downward trend in inflation and potential economic growth.

Japan’s Nikkei 225 experienced a modest rise of 0.2%, reaching 33,225.45, while Taiwan’s Taiex saw a slight increase of 0.1%. The SET index in Bangkok also climbed by 0.2%. In contrast, China’s Shanghai Composite Index witnessed a decline of 0.3%, falling to 2,905.79.

The majority of markets in Asia and other regions remained closed due to the Christmas holiday.

The S&P 500 in the United States edged up by 0.2% on Friday, approaching its record high from nearly two years ago, now standing at 4,754.63. Conversely, the Dow Jones Industrial Average experienced a marginal drop of less than 0.1%, closing at 37,385.97, while the Nasdaq Composite Index gained 0.2%, ending at 14,992.97.

The S&P 500 is currently enjoying its longest streak of weekly gains since 2017, marking eight consecutive weeks of advancement.

Investor attention on Wall Street was primarily on several economic reports released last Friday, which caused fluctuations in Treasury yields.

The Federal Reserve’s preferred inflation gauge showed a more significant slowdown than anticipated, dropping to 2.6% in November from 2.9% the previous month. This mirrors the trend seen in other inflation reports for November.

Unexpectedly, consumer spending in the U.S. increased during November. This is a positive sign for an economy predominantly driven by consumer expenditure, yet it may also suggest persistent inflationary pressures.

Additional reports from Friday indicated stronger-than-expected orders for durable goods in November, a surprising dip in new home sales, and an improvement in U.S. consumer sentiment.

The Federal Reserve faces a challenge in moderating economic growth through increased interest rates to curb inflation, without pushing the economy into a recession. A more robust economy than anticipated could make this balancing act more complex.

The yield on the 10-year Treasury note remained stable at 3.90% early Monday, consistent with its level from late Friday. This is a notable decrease from October’s peak of over 5%, which had exerted significant downward pressure on the stock market.

Decreasing yields have been instrumental in the stock market’s approximately 15% surge since late October. Lower yields not only stimulate the economy by promoting borrowing but also alleviate stress on the financial system and enhance investment values. The anticipation that the Federal Reserve might reduce interest rates through 2024 due to subsiding inflation has contributed to this easing.

Market traders predominantly anticipate that the Federal Reserve will lower its benchmark interest rate by at least 1.50 percentage points by the end of the upcoming year, as per data from the CME Group. The federal funds rate currently oscillates between 5.25% and 5.50%, its highest in over two decades.

In foreign exchange markets, the U.S. dollar weakened against the Japanese yen, dropping to 142.18 yen from 142.49 yen. The euro also declined slightly to $1.1007 from $1.1019.

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• Asian Stock Market Performance
• Wall Street Weekly Gains
• Economic Reports Impact on Treasury Yields
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