On Friday, Asian markets exhibited a mixed performance as apprehensions lingered regarding the Federal Reserve's interest rate direction, while the U.S. grappled with the prospect of a government shutdown following President-elect Donald Trump's unexpected withdrawal from a bipartisan agreement.
The dollar remained close to a two-year peak, suppressing demand for commodities, including oil. While gold experienced a minor uptick in Asian trading, it was headed for a weekly decline after the Federal Reserve indicated a deceleration in the pace of rate cuts.
The upcoming U.S. Personal Consumption Expenditure data, representing the Fed's favored inflation gauge, is anticipated to significantly influence the Federal Reserve's rate strategy amidst the transition to the Trump administration.
China's Shanghai Composite Index fluctuated before ending slightly down at 3,368.07, as the People's Bank of China opted to maintain its benchmark lending rates, contrary to market predictions for a reduction. The one-year loan prime rate stood firm at 3.10 percent and the five-year rate at 3.60 percent. Meanwhile, Hong Kong's Hang Seng Index concluded 0.16 percent lower at 19,720.70 following a turbulent trading session.
In Japan, markets oscillated between gains and losses before closing moderately lower, as data revealed that Japan's annual inflation soared to 2.9 percent in November 2024 from 2.3 percent the previous month, the highest rate since October 2023. The Nikkei average declined by 0.29 percent to 38,701.90, while the broader Topix index fell by 0.44 percent to 2,701.99. The yen struggled to leverage a modest intraday rebound as officials intensified warnings against excessive currency speculation. Bank of Japan Governor Kazuo Ueda mentioned on Thursday that further analysis of wage and other data is required before contemplating another rate hike.
South Korea's Kospi average plummeted by 1.30 percent to 2,404.15, impacted by the dual challenges of a stronger dollar and domestic political instability.
Australian market indices experienced sharp declines, with financial and consumer sectors absorbing the brunt of the losses. The benchmark S&P/ASX 200 index fell 1.24 percent to 8,067, while the broader All Ordinaries index decreased by 1.17 percent to 8,316.70. Notably, conglomerate Wesfarmers saw its shares drop by 5 percent after announcing the sale of Coregas to Nippon Sanso for A$770 million.
In contrast, New Zealand's benchmark S&P/NZX-50 index rose by 1.18 percent to 12,904.11 due to index modifications and robust late trading activity.
U.S. stocks remained largely unchanged overnight after experiencing significant drops in the previous session due to the Federal Reserve's hawkish stance. Positive economic indicators supported the Fed's cautious stance on further rate cuts. Weekly initial jobless claims decreased more than anticipated, existing home sales surged to an eight-month high, and the third quarter GDP was revised up to reflect a 3.1 percent growth from an earlier estimate of 2.8 percent. The Dow marginally increased after hitting its lowest point in over a month the previous day, while the tech-focused Nasdaq Composite and the S&P 500 displayed a negative trend.
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