Japanese stocks surged towards a new three-decade high, defying declines in other Asian markets, as investors awaited crucial US inflation data. The Topix index surpassed a September intraday high, reaching a 34-year peak, propelled by a weaker yen that supported exporter stocks. Meanwhile, the Nikkei 225 index leaped over 2%, extending its highest levels since 1990 from the previous day. Despite broader market sentiment remaining subdued, these gains contributed to a slight rise in a gauge of Asian equities. In the cryptocurrency realm, Bitcoin rebounded over 1% to approximately $46,167, following recent volatility related to speculation surrounding the approval of spot-Bitcoin exchange-traded funds by the US Securities and Exchange Commission (SEC). However, the SEC clarified that it had not yet given approval, refuting an earlier conflicting statement on its official X account.
Market Analysis: The broad Topix index reached a 34-year peak, supported by a weaker yen and expectations of sustained corporate earnings due to yen depreciation against the dollar. Japanese stocks remained firm despite receding market expectations for an early Fed rate cut in the new year. The subdued broader market sentiment is attributed to investors awaiting crucial US inflation data to determine market direction.
Cryptocurrency Update: Bitcoin’s rebound followed recent volatility triggered by speculation around SEC approval of spot-Bitcoin exchange-traded funds. The SEC clarified that approval had not been granted, dispelling conflicting information from its official X account.
Global Economic Factors: Investors are closely monitoring the US inflation report for insights into the Federal Reserve’s potential rate cut timing. A potential “reverse Goldilocks” scenario is anticipated, with aggressive pricing for US interest rate cuts conflicting with resilient economic fundamentals. China’s economic reports and geopolitical tensions, such as those related to Taiwan, continue to impact global markets.
Commodities: Oil prices rose as US crude stockpiles continued to decline, accompanied by increased geopolitical tensions affecting Middle East supply. Ongoing attacks on vessels in the Red Sea raised concerns about potential disruptions.
Upcoming Events: Key events this week include the release of US wholesale inventories, the World Economic Forum’s global risks report, speeches by central bank officials, US CPI and jobless claims data, China’s CPI, PPI, and trade reports, and fourth-quarter results from major US banks.
Market Movements:
- S&P 500 futures and Nasdaq 100 futures were little changed.
- Japan’s Topix rose by 1.5%, while Australia’s S&P/ASX 200 fell by 0.7%.
- Hong Kong’s Hang Seng and Shanghai Composite declined by 0.4% and 0.2%, respectively.
- The Bloomberg Dollar Spot Index showed little change.
- Bitcoin rose by 1.4% to $46,053.95, and Ether rose by 2.3% to $2,370.55.
- Yields on 10-year Treasuries and other global bonds showed minimal changes.
- West Texas Intermediate crude rose by 0.5% to $72.60 a barrel.
