By Wayne Cole
SYDNEY (Reuters) – Asian shares got off to a light start to the week on Monday as high Treasury yields buoyed Wall Street stocks while supporting the U.S. dollar near multi-month highs.
Numbers were weak with the upcoming New Year holidays and a fairly bare data log this week. China has PMI factory surveys on Tuesday, while the US ISM survey for December is due on Friday.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2% but is still 16% higher for the year. decreased by 0.9%, but is on a gain of around 20% for 2024.
South Korea’s main index was not so lucky, after being caught in a storm of political uncertainty in recent weeks, and is saddled with losses of 9% for the year. Last time it increased by 0.3 percent.
Shares of South Korea’s low-cost carrier Jeju Air fell to an all-time low on Monday, following the plane crash that killed 179 people.
China’s blue chips added 0.3%, to rise nearly 16% year-to-date, with almost all of that gain coming in just two weeks in September after Beijing promised more stimulus.
EUROSTOXX 50 futures gained 0.1%, while they were little changed.
and Nasdaq futures were down 0.1%. Wall Street suffered a broad sell-off on Friday with no apparent trigger, although volumes were only two-thirds of the daily average. [.N]
It’s up 25% for the year and the Nasdaq is up 31%, boosting valuations compared to risk-free government bond returns. Investors are counting on earnings per share growth of just over 10% in 2025, compared to expected growth of 12.47% in 2024, according to LSEG data.
Still, 10-year Treasury yields are near an eight-month peak at 4.631% and ended the year about 75 basis points above where they started, even as the Fed cut 100 basis points in cash rates.
“The continued rise in bond yields, driven by a reassessment of less restrictive monetary policy expectations, creates some concern,” said Quasar Elizundia, research strategist at brokerage Pepperstone.
“The potential for the Fed to maintain tight monetary policy longer than expected could dampen corporate earnings growth expectations for 2025, which in turn could weigh on investment decisions.”
Bond investors may also be wary of rising supply as President-elect Donald Trump promises tax cuts with few concrete proposals to rein in the budget deficit.
Trump is expected to announce at least 25 executive orders when he takes office on January 20, covering a range of issues from immigration to energy and crypto policy.
Widening interest rate differentials have kept the US dollar in demand, allowing it to gain 6.5% annually against a basket of major currencies.
The euro has lost more than 5% against the dollar so far in 2024 to last trade at $1.0427, not far from its recent two-year low of $1.0344.
The dollar held close to a five-month high against the yen at 157.79, with only the risk of Japanese intervention preventing another test of the 160.00 barrier.
The strength of the dollar has been a drag on gold prices, although the metal is still 28% higher for the year to date at $2,624 an ounce. [GOL/]
Oil has had a tougher year as concerns about demand, particularly from China, kept prices under pressure and forced OPEC+ to repeatedly extend the deal to limit supplies. [O/R]
rose 6 cents to $74.23 per barrel, while adding 1 cent to $70.61 per barrel.
