Asian stock markets exhibited a mixed performance on Wednesday, as strong US economic data clouded the outlook for rate cuts in 2025.
MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.2%, reflecting a cautious trading environment across the region.
Treasury yields held steady after the previous session’s sell-off, with the 10-year note auction delivering the highest yield since 2007.
This followed robust US service-sector activity and job openings data, which pointed to a resilient economy.
Federal Reserve Bank of Atlanta President Raphael Bostic urged caution on monetary policy, citing uneven progress in reducing inflation.
China and Hong Kong market continue downturn
In China, the CSI 300 fell 0.8% as the yuan weakened to its lowest level since September 2023.
This came despite renewed efforts by the central bank to stabilise the currency.
The Hang Seng Index in Hong Kong also dipped over 1%, with reports indicating that major banks such as HSBC and Standard Chartered were hoarding cash instead of extending loans to struggling small businesses.
Tencent shares continued to face ongoing selling pressure, dropping 2.2%. Shares of the tech major have been under pressure after the US named it as a Chinese military company.
Nikkei seesaws on Wednesday
Japan’s Nikkei has started the new year on a seesaw. The index crashed heavily on Monday before rebounding strong on Tuesday.
Today, the Nikkei average is down again.
Japan’s Nikkei slipped 0.4%, although gains in tech stocks like Advantest and Tokyo Electron provided some support.
This came amid a sell-off in US tech stocks, led by Nvidia, as its product presentation left investors unimpressed.
Other Asian markets
South Korea’s Kospi index rose more than 1%, driven by tech and healthcare stocks.
The index had a slow start but quickly rebounded.
Samsung Electronics jumped 2.7% despite issuing a profit forecast that fell short of expectations.
Australia’s benchmark S&P/ASX 200 advanced 0.6% as a drop in the core inflation rate bolstered expectations of an interest rate cut by the Reserve Bank of Australia as early as next month.
Wall Street ends lower on Tuesday
US stocks opened higher on Tuesday but reversed course sharply, with all major indices ending the day in the red.
The Nasdaq led the losses, dropping 375.30 points or 1.9% to 19,489.68, while the S&P 500 fell 66.35 points or 1.1% to 5,909.03.
The Dow recorded a smaller decline, shedding 178.20 points or 0.4% to close at 42,528.36.
Technology stocks were among the hardest hit. Nvidia (NVDA) fell 6.2%, retreating from a record intraday high, while Tesla (TSLA) declined 4.0% after Bank of America downgraded the stock from “Buy” to “Neutral”, citing valuation concerns.
The selloff coincided with a notable rise in treasury yields, as the benchmark ten-year note surged to its highest level in eight months.
The increase fueled concerns about the potential for prolonged higher interest rates, particularly after the release of robust U.S. economic data.
The Institute for Supply Management (ISM) reported that its services PMI rose to 54.1 in December, up from 52.1 in November, beating market expectations of 53.3.
Separately, the Labor Department revealed a surprise increase in job openings for November, indicating continued resilience in the labour market.
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