Asian stock markets approached the trading day with caution, anticipating crucial policy announcements from the U.S. Federal Reserve and the Bank of Japan. The Nikkei index in Tokyo rose slightly, while Chinese markets awaited key economic indicators. Political uncertainty in South Korea following President Yoon Suk Yeol’s impeachment led to stability in the Seoul Stock Exchange. Meanwhile, Bitcoin surged past $106,000, and oil prices experienced a decline.
Asian Markets Display Caution Ahead of Major Policy Announcements
On Monday, Asian stock markets approached the trading day with a sense of caution as investors await significant monetary policy decisions from both the U.S. Federal Reserve (Fed) and the Bank of Japan (BoJ) this week. Additionally, Chinese markets are keeping a close eye on the upcoming release of crucial economic indicators.
Tokyo’s Market Eyes Fed and BoJ Decisions
At the Tokyo Stock Exchange, the Nikkei index experienced a slight increase of 0.21%, reaching 39,555.08 points around 1:15 GMT, while the broader Topix index remained steady at 2,746.45 points. According to Kosuke Oka from Monex Securities, Japanese markets are expected to move within a narrow range following a mixed close on Wall Street last week.
The recent surge in shares of semiconductor giant Broadcom, coupled with the yen’s ongoing decline, could offer support for Japanese stocks. However, Oka warns that “nervousness is likely to settle in” as crucial policy announcements approach from both the U.S. and Japan.
Global attention is particularly focused on the Fed’s impending announcement, with many analysts anticipating a quarter-point rate cut on Wednesday. Stephen Innes of SPI Asset Management notes that this cut is already priced into the markets. However, he cautions that the Fed’s potential slowdown in 2025 and the looming threat of trade barriers could leave markets on shaky ground.
Opinions regarding the BoJ’s upcoming decision on Thursday are more varied, with an increasing number of economists suggesting that the central bank may opt to delay tightening until January. On one hand, the BoJ is concerned that a weak yen could lead to rising inflation, negatively impacting real wages and consumer spending. Conversely, Moody’s Analytics indicates that recent volatility in financial markets, along with the yen’s recovery against the dollar, might persuade the Bank to hold off on any immediate rate hikes.
Chinese Markets Await Key Economic Indicators
Chinese stock markets are also treading carefully as they await the release of important economic indicators scheduled for Monday, including industrial production and retail sales figures for November.
Investors reacted negatively to a vague communication issued on Friday regarding future economic stimulus plans for 2025 after a significant meeting with Chinese President Xi Jinping. In early trading, the Hang Seng index in Hong Kong saw a modest rise of 0.14%, reaching 19,999.23 points, while the Shanghai composite index increased by 0.1%. However, the Shenzhen index experienced a slight decline of 0.05%.
Seoul Markets Steady Amid Political Uncertainty
The Seoul Stock Exchange remained relatively stable following Parliament’s decision to impeach South Korean President Yoon Suk Yeol, leaving his fate in the hands of the Constitutional Court. The court has six months to decide on the impeachment, and should it be upheld, a presidential election will need to be conducted within two months.
Stephen Innes notes that while this political development may introduce some volatility to the South Korean won, its impact on the market is expected to be more subdued than drastic. Currently, Prime Minister Han Duck-soo is managing the interim situation, and his experience is anticipated to provide stability during this tumultuous period. As of around 01:20 GMT, the Kospi index saw a slight increase of 0.03%, and the South Korean currency remained stable at 1,435 won to the dollar, reflecting a minor uptick of 0.02%.
Bitcoin’s Continued Surge
In the cryptocurrency world, Bitcoin has been on an upward trajectory in recent weeks. On Monday morning, it briefly surpassed the $106,000 threshold for the first time before trading around $105,033 at 01:30 GMT. Meanwhile, the dollar remained stable against the Japanese yen at 153.74 and experienced a 0.17% dip against the euro, trading at $1.0519. Oil prices also saw a decline, with WTI crude dropping by 0.46% to $70.96 and North Sea Brent slipping by 0.32% to $74.25 as of 01:15 GMT.