In a shift of sentiment, Asian stocks retreated from recent highs, and the dollar regained support as optimism over a dovish Fed waned. Key market movements and developments include:
- Asia-Pacific Stocks: MSCI’s broadest index of Asia-Pacific shares, excluding Japan, declined by 0.54%, stepping back after a 3% gain over the past week. Japan’s Nikkei, however, rose by 0.29%.
- U.S. Markets: The S&P 500 ended a five-session winning streak, falling by 0.2%. Nvidia’s robust earnings report failed to uplift shares due to a cautious outlook on China sales.
- European Markets: European shares are poised for a subdued opening, with futures indicating marginal gains for Eurostoxx 50, German DAX, and FTSE.
- Market Analysis: Analysts suggest that the short-covering rally post the November Fed meeting is tapering off, with buying and selling starting to alternate.
- Interest Rates: Ten-year Treasury yields saw a marginal decrease to 4.3910%, continuing a decline of about 50 basis points since the Fed’s decision to hold rates steady earlier in the month.
- Fed’s Outlook: The Fed’s promise to “proceed carefully” in the released meeting minutes did not offer new information, leading to expectations of no further rate hikes and potential rate cuts through 2024.
- Foreign Exchange: The dollar, rebounding from recent lows, held steady against the euro and edged higher against the yen. The Australian dollar remained constrained.
- Yen Prospects: Analysts foresee the yen benefiting from bond yield gaps and a moderation in U.S. inflation, with potential for the Bank of Japan to stand out by raising its policy rate.
- China’s Yuan: The yuan, which gained 2% in the past week, stabilized at 7.1403 against the dollar, supported by major state-owned banks buying the currency.
- Economic Data: Singapore’s economy exceeded initial estimates in Q3, driven by a tourism resurgence. Later, RBA Governor Michele Bullock is set to speak, and U.S. jobless claims data is awaited.
- Commodity Markets: Brent crude futures dipped to $82.32 per barrel, while Singapore iron ore futures, up over 10% for the month, held at $131 a tonne.
- Bitcoin Movement: Bitcoin experienced a 1% decline to $36,416 as Binance CEO Changpeng Zhao stepped down and pleaded guilty to U.S. anti-money laundering violations as part of a $4.3 billion settlement.
As markets adjust to evolving Fed expectations, ongoing economic data and central bank actions will likely influence global market trends.
