Asian stock markets began the week on a mixed note, primarily trading lower this Monday following the indecisive response from Wall Street last Friday. This downturn is largely attributable to traders' lukewarm reception of China's recent stimulus measures, which they found lacking, alongside apprehensions about the U.S. Federal Reserve's impending interest rate decision slated for later this week. Notably, Asian markets demonstrated a mixed performance as trading concluded last Friday.
Forecasts widely predict that the U.S. Federal Reserve will lower interest rates by 25 basis points this Wednesday. However, traders are expected to scrutinize the accompanying statement carefully, seeking any indications of further rate adjustments. There remains significant uncertainty regarding the economic outlook for 2025 due to persistent inflation challenges.
The CME Group's FedWatch Tool presently indicates a 97.1 percent probability of the Fed enacting this quarter-point rate cut next week. Nonetheless, there is also an 81.0 percent likelihood that the central bank will maintain the rates at their new level in late January.
In Australia, the stock market is experiencing modest declines on Monday, continuing a downward trend from the last four sessions. The benchmark S&P/ASX 200 index remains beneath the 8,300 mark, with widespread sectoral weakness, prominently led by mining and technology stocks.
Currently, the S&P/ASX 200 Index has decreased by 25.30 points, or 0.31 percent, to 8,270.70, after reaching a low of 8,263.10 earlier. The All Ordinaries Index is also down by 34.90 points, or 0.41 percent, at 8,515.40. Among key mining stocks, BHP Group is down nearly 2 percent, Rio Tinto has fallen by 1.5 percent, Fortescue Metals has declined 2.5 percent, and Mineral Resources has dropped more than 1 percent. Oil stocks exhibit mixed performance, with Santos and Origin Energy both slightly up by 0.1 percent, Beach Energy rising almost 2 percent, while Woodside Energy is slightly down by 0.3 percent.
In the technology sector, Block, the owner of Afterpay, and WiseTech Global each faced declines of over 1 percent, whereas Zip and Xero saw marginal gains of 0.2 percent each. Appen notably tumbled by almost 4 percent.
Gold mining stocks largely trended lower. Evolution Mining saw an almost 2 percent drop, Northern Star Resources edged down 0.5 percent, Newmont slipped 3.5 percent, Resolute Mining fell more than 5 percent, and Gold Road Resources dipped almost 1 percent.
When examining the big four banks, National Australia Bank, Westpac, ANZ Banking, and Commonwealth Bank registered slight gains ranging from 0.2 to 0.5 percent.
Turning to corporate developments, Ventia Serviced shares plunged nearly 8 percent after company executives were implicated in price-fixing allegations by the ACCC last week.
Regarding economic updates, Australia's Judo Bank reported a continuing contraction in the manufacturing sector during December, with the PMI score declining to 48.2 from 49.4 in November, further slipping below the 50-point expansion threshold. The services index slightly eased to 50.4 from 50.5, and the composite index contracted to 49.9 from 50.2 the previous month.
On the currency front, the Australian dollar was trading at $0.636 on Monday.
In Japan, the stock market showed slight increases, reversing losses from the previous session. The benchmark Nikkei 225 Index closed the morning session at 39,533.55, up by 63.11 points or 0.16 percent, achieving an earlier high of 39,632.17. On Friday, Japanese shares had seen significant declines.
Market heavyweight SoftBank Group experienced a gain of more than 1 percent, while Fast Retailing, operator of Uniqlo, climbed up by 0.1 percent. In the automotive sector, both Honda and Toyota edged up by 0.1 percent and 0.2 percent, respectively.
In the tech sector, Tokyo Electron added almost 1 percent, Advantest gained nearly 2 percent, while Screen Holdings saw a decrease of 0.5 percent.
Within banking, Sumitomo Mitsui Financial and Mitsubishi UFJ Financial showed minor decreases between 0.1 to 0.2 percent, with Mizuho Financial losing nearly 1 percent.
Major exporters fared better, with Panasonic seeing a nearly 4 percent rise, Canon increasing by almost 1 percent, and Mitsubishi Electric climbing over 1 percent, while Sony remained flat.
Among other significant gainers, Socionext advanced over 6 percent, and Fujikura rose nearly 4 percent. Additionally, Fujikura, Isuzu Motors, and Fuji Electric each saw gains of almost 3 percent. Conversely, Yamato Holdings declined by almost 3 percent.
In further economic news, Japan's Cabinet Office on Monday reported an increase in core machine orders, up 2.1 percent month-on-month in October, with a total of 869.8 billion yen, surpassing the forecasted 1.2 percent increase following September's 0.7 percent decline.Core machine orders experienced a significant annual increase of 5.6%, surpassing expectations of a modest 0.7% rise, following a decline of 4.8% the previous month. Projections for the fourth quarter of 2024 suggest a quarterly growth of 5.7% and an annual increase of 8.0%.
According to the Jibun Bank report, Japan's manufacturing sector continued to experience contraction in December, albeit at a slower rate, with a manufacturing PMI of 49.5, an improvement from 49.0 in November but still below the key threshold of 50 that distinguishes expansion from contraction. On the other hand, the services PMI showed improvement, rising to 51.4 in December from 50.5 in November.
In currency markets, the U.S. dollar was trading in the higher 153 yen range on Monday.
Elsewhere across Asian markets, New Zealand, China, Hong Kong, Malaysia, and Indonesia recorded losses ranging from 0.1 to 1.0%, while Singapore noted a 0.3% gain. Taiwan and South Korea remained relatively unchanged.
On Wall Street, the trading session on Friday was marked by a lack of clear direction after initial gains couldn't hold. The major indices fluctuated before closing with mixed results. The Dow Jones Industrial Average fell by 86.06 points, or 0.2%, to finish at 43,828.06, marking its seventh consecutive session of decline. The S&P 500 showed a slight decline, dropping 0.16 points to 6,051.09, while the Nasdaq Composite gained 23.88 points, or 0.1%, to close at 19,926.72.
In Europe, the major markets experienced minor downward movements for the day. The French CAC 40 Index decreased by 0.2%, whereas both the U.K.'s FTSE 100 Index and Germany's DAX Index saw declines of 0.1%.
Crude oil prices rose on Friday as geopolitical tensions and additional sanctions on Iran and Russia rekindled supply concerns. West Texas Intermediate Crude for January delivery climbed $1.27, or approximately 1.8%, closing at $71.29 per barrel.
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