Japanese stocks defied the global downtrend, soaring to their highest levels in thirty years. Both the Topix index, reaching heights unseen since March 1990, and the Nikkei 225 index, which surged 2% on hitting this milestone, showcased this impressive surge.
While Japan enjoyed this positive market momentum, the broader Asian equities landscape witnessed a downturn, especially notable in China, Hong Kong, and Australia. European stocks faced a similar fate, and US equity futures also indicated a downward trajectory.
Analysts, exemplified by Jun Rong Yeap from IG Asia, foresee cautious market sentiment due to a relatively quiet economic calendar. They eye the upcoming US inflation report as a crucial determinant for future market movements.
Amidst volatility sparked by speculation regarding potential approval of spot-Bitcoin exchange traded funds by the US Securities and Exchange Commission, Bitcoin saw a 1% surge, hitting around $46,010. However, the SEC dispelled these notions, clarifying the absence of any such approval, countering an earlier unofficial post on the regulator’s official X account.
In the Asian trading sphere, Treasury 10-year yields climbed, maintaining a stable dollar. The yen’s decline against the dollar, partly due to a notable slowdown in Japanese worker wage growth, potentially restrains the Bank of Japan from shifting away from its ultra-loose policy stance.
Rie Nishihara, JPMorgan’s chief Japan equity strategist, highlighted that Japanese stock buoyancy stemmed from expectations surrounding the yen’s depreciation against the dollar, bolstering corporate earnings prospects.
Investor focus remains fixed on the forthcoming US inflation report, expected to provide insights into potential Federal Reserve rate adjustments. Bloomberg Economics anticipates a reversal in December’s declining headline inflation.
China’s upcoming inflation, trade, and credit reports promise to offer crucial glimpses into the health of the world’s second-largest economy. Geopolitical tensions persist, notably highlighted by China’s stance against any advocacy for Taiwan’s independence.
In other realms, oil prices surged due to ongoing drops in US crude stockpiles. Heightened Red Sea vessel attacks heightened concerns about potential disruptions in Middle East oil supply.
Corporate news showcased Taiwan Semiconductor Manufacturing Co.’s surpassing fourth-quarter revenue estimates, attributed to AI-related demand offsetting declines in smartphone and laptop chip sales.
