Asian stock markets showed caution on January 9, as investors awaited U.S. employment data and reacted to low inflation figures from China, indicating weak consumption. The Nikkei index dropped by 0.83%, while the dollar stabilized despite concerns over trade tensions and impending regulations on AI chip exports. China’s consumer prices saw minimal growth, reflecting ongoing economic challenges. Additionally, oil prices fell amid fears of reduced consumption linked to China’s economic performance and ample global supply.
Asian Stock Markets Experience Caution
On Thursday, January 9, Asian stock markets faced a downturn as investors adopted a wait-and-see approach. This cautious sentiment was amplified by the upcoming closure of Wall Street and the anticipation of U.S. employment statistics. Adding to the unease was the announcement of almost negligible inflation in China, which pointed towards persistently weak consumption and further dampened investor confidence.
Market Volatility Ahead of Employment Data
As Asian stock markets dipped, a sense of caution prevailed, particularly with New York markets set for an exceptional closure due to a day of mourning following the passing of former President Jimmy Carter. Investors were on edge ahead of Friday’s crucial release of December’s employment figures in the U.S., which are expected to impact the Federal Reserve’s monetary policy outlook.
By 02:00 GMT, the Nikkei index in Tokyo had decreased by 0.83%, settling at 39,650.64 points, while the broader Topix index fell 0.90% to 2,744.67 points. The Sydney Stock Exchange experienced a slight decline of 0.06%, while Seoul managed a modest gain of 0.33%.
According to Tokai Yokyo Intelligence, “A wait-and-see sentiment is likely to dominate before the U.S. employment data, and turbulence could emerge in Tokyo due to a significant increase in ten-year Japanese bond yields influenced by U.S. long-term bond rates.”
Dollar Stabilizes Amid Economic Concerns
As Donald Trump prepares for his inauguration on January 20, attention remains focused on potential economic policies. The dollar saw a surge on Wednesday after reports indicated that the president-elect might consider declaring an economic state of emergency to expedite tariff increases. This development drove traders towards the dollar as a safe haven amidst anticipated disruptions in international trade. However, by Thursday morning, the dollar showed signs of stabilization, dropping 0.17% against the Japanese yen to 158.08 and remaining nearly unchanged against the euro at 1.0318 dollars per euro.
The looming trade tensions have raised concerns for companies heavily dependent on U.S. exports, such as Toyota, which saw its shares decline by 1.91%. Furthermore, reports suggest that the Biden administration is poised to impose stricter regulations on AI-related chip exports, particularly targeting companies like Nvidia, to limit access for China and Russia. This news has negatively impacted Japanese semiconductor manufacturers, with stocks like Tokyo Electron (-1.45%), Sumco (-2.44%), and Renesas (-2.01%) all experiencing declines.
In other corporate news, Sumitomo Rubber Industries reported a 0.34% drop in shares after announcing a significant buyback of the Dunlop tire brand from Goodyear for $701 million.
China’s Economic Outlook
China narrowly avoided deflation in December, with consumer prices rising by only 0.1% year-on-year, highlighting the ongoing challenges faced by the world’s second-largest economy despite government stimulus measures. This figure, which aligned with expectations, resulted in restrained movements in Chinese markets. By 02:30 GMT, the Hang Seng index in Hong Kong increased by 0.21% to 19,321.25 points, while the Shanghai composite index fell by 0.43% and the Shenzhen index rose by 0.22%.
Economist Vincent Chui from Morgan Stanley noted that while Chinese markets are reaching a potential bottom before a rebound, the strong allure of U.S. stock markets may make it harder for China to attract international investors in the short term.
Oil Prices Decline
As of 02:30 GMT, U.S. WTI crude prices slipped by 0.50% to $72.95 per barrel, while North Sea Brent crude dropped by 0.46% to $75.81 per barrel. A recent report from the U.S. Energy Information Administration (EIA) has rekindled fears of declining oil consumption, particularly given China’s economic struggles as the largest global importer, coupled with an abundant supply of oil worldwide.