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Asian equities showed signs of bucking the dour mood on Wall Street that dragged US stocks lower for a fifth day, underscoring a cautious start to the year. Shares in Australia and South Korea edged higher, as did US equity futures, after the S&P 500 and Nasdaq 100 both fell on Thursday. Equity trading in Japan is closed for a holiday.
The fall for US stocks accompanied a rally in the dollar, a popular haven, which set a fresh two-year high Thursday and opened little changed Friday. The yen climbed in early trading after a third daily decline against the greenback in the prior session. The moves are a sign the selling that has sapped US equities over the past week may be starting to turn.
Investors are preparing to implement asset-allocation strategies for the year ahead after a rocky end to 2024. Australian and New Zealand government yields were little changed after a flat day for Treasuries Thursday. The US 10-year yield fell one basis point in the session.
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” Losses for US stocks were partly driven by lackluster results from Tesla Inc. The electronic vehicle-marker’s fourth-quarter deliveries missed estimates and annual sales dropped for the first time in over a decade. The carmaker’s stock has now fallen 18% since Christmas.
The retreat from risk on Thursday also hit Asian stocks . Chinese equities had been the worst performers in the session as data pointed to a slowing economy and traders looked ahead to potentially higher tariffs. A global gauge of emerging-market stocks dropped to the lowest level since September and neared a 10% decline from a high in early October.
Despite small gains in for Treasuries on Thursday, the benchmark 10-year yield ended the session nearly 20 basis points above the level prior to Jerome Powell’s hawkish turn at a Dec. 18 Federal Reserve meeting. Big moves have proliferated across asset classes after Powell’s board expressed waning enthusiasm for interest-rate cuts.
The Fed would find little to support rate cuts in economic data from Thursday. Initial applications for US unemployment fell to an eight-month low, reflecting relatively muted levels of job cuts in a labor market that has remained surprisingly resilient. On the corporate earnings front, 2025 will be a “show-me year,” according to Lisa Shalett at Morgan Stanley Wealth Management, who warned that the dominance of the Magnificent Seven — the big technology stocks responsible for the bulk of last year’s gains — was teetering.
“This idea that they as a group can trade together and lead the market may falter in 2025,” she said. As for the slide in the final days of 2024, it’s “too soon to call it a bad omen,” Shalett said on Bloomberg Television. Losing Streak US stocks have been straining to snap a losing streak that took some shine off the S&P 500’s best two-year run dating back to the late 1990s.
The index has surged more than 50% since the start of 2023, driven by gains in the tech megacaps amid enthusiasm about the boost to profits from artificial intelligence. Investors will be watching the US House Speaker vote Friday to see if Mike Johnson will retain his position. Republican squabbling over his reelection could bode ill for President-elect Donald Trump’s agenda, according to Tom Essaye, founder of the Sevens report.
European energy shares outperformed after a sharp increase in natural gas prices as the region braced for freezing winter temperatures without Russian supplies delivered via Ukraine. A transit contract between the two warring nations expired on New Year’s Day, with no alternative in place. Elsewhere in commodities, oil was steady after climbing Thursday on an industry report signaling US crude stockpiles continued to shrink.
A report from the American Petroleum Institute showed inventories fell by 1.4 million barrels last week, which would be a sixth straight drop. Gold was steady at around $2,657 an ounce, after notching its biggest annual gain since 2010 last year.
Bitcoin dropped for the first time in four days. (You can now subscribe to our ETMarkets WhatsApp channel ).
