Alden Bentley, Americas Breaking News Editor for Finance & Markets, examines the day’s events in Asian markets.
After spiking into Asian trading on Wednesday, the early 2024 shake out persisted on Wall Street and might be a challenge for Japanese equities when they reopen on Thursday.
The Nikkei gained 28% in 2023—the largest annual increase in ten years—and finished the year just less than 1.0% behind a 33-year peak reached in November. Tokyo’s markets will resume on Thursday after being closed for a public holiday.
However, on Wednesday, other Asian stock markets continued the worldwide sell-off, with their currencies primarily depreciating against the US dollar. In a slow start to 2024, MSCI’s broadest index of Asia-Pacific equities outside of Japan was down nearly 1.5% following a 1.0% down on Tuesday. In 2023, the index increased 4.6%.
Data-wise, nothing significant is scheduled until Friday’s U.S. payroll report. The U.S. publication of the Federal Open Market Committee meeting minutes from December on Wednesday little affected the markets. It is unlikely to have little impact on Thursday’s trading, indicating that officials believed the fight against out-of-control inflation was virtually won and that they were about to ease this year.
Even while it’s acknowledged that inflation pressures have decreased, greater caution must still be used to guarantee that the gentle landing that everyone has accepted is planned. In a client letter, Charlie Ripley, senior investment strategist at Minneapolis-based Allianz Investment Management, stated.
Next week’s CPI figures will demonstrate whether they are on target. However, the mid-month commencement of the U.S. Q4 earnings announcement cycle might help determine whether the S&P 500 makes a run at hitting a record high, which it just missed last week, for simmering market motivations.
According to LSEG statistics, fourth-quarter S&P 500 profits are expected to increase by 5.2%, which is less than the 11% growth projection from October 1. Earnings growth over the previous year is predicted to be 11.1% in 2024.
Big tech and chip firms led the way as the S&P 500 fell 0.6% and the Nasdaq fell more than 1.0% in late afternoon trading. The dollar gained almost 0.9% versus the yen after reaching a two-week high. It reached its best price against the yuan since December 13.