Asia Starts the New Year Following a Troubling End to 2024: Market Overview

Asian stock markets began the new year with caution after a less than favorable finish to 2024 for global investors.

Market Overview in Asia

Sydney's shares remained largely stable while futures predictions indicated a slight uptick for Hong Kong's main index. Meanwhile, futures for mainland Chinese markets showed a decline after trading on December 31 resulted in a significant drop.

In the United States, the S&P 500 and Nasdaq 100 reported losses for the fourth consecutive session, resulting in a year-end reduction of over a trillion dollars in the value of large-cap stocks.

Japanese markets are currently closed until January 6, and New Zealand is also on holiday, while South Korea opened later than usual. US equity futures also experienced a decline.

Currency Movements and Economic Indicators

The Japanese yen depreciated to around 157 per dollar, marking an ongoing decline in value following a strong performance from the US dollar. The Bloomberg Dollar Spot Index ended the previous year on a high note, recording its best performance in nearly a decade.

Oil prices remained steady at the start of the new year, supported by a report indicating decreasing US crude oil stockpiles. Additionally, the flow of Russian gas through Ukraine to Europe has ceased, impacting energy supplies.

In the bond market, Treasury yields showed a slight annual gain for 2024, though less than what was achieved in 2023. However, trading for Treasuries is currently paused in Asia due to the holiday in Japan.

Corporate Updates

During the New Year period, Nippon Steel Corp. proposed giving the US government oversight on any cuts to US Steel Corp.'s production capacity, seeking President Joe Biden's approval for its acquisition of the American firm. Subsequently, US Steel's shares surged significantly.

In other corporate news, Alibaba Group Holding Ltd. finalized a deal to sell its stake in Sun Art Retail Group Ltd. to private equity firm DCP Capital, aiming to refocus on its primary online business. BYD Co., a prominent player in the electric vehicle market, announced a record total sales of 4.25 million passenger cars for the last year.

Economic Outlook

China's economy, which is the world's second-largest, is projected to expand approximately 5% for 2024, according to President Xi Jinping. The Chinese central bank also injected significant liquidity into the economy at year-end, totaling 1.7 trillion yuan (around $233 billion).

Meanwhile, Singapore's Prime Minister Lawrence Wong reported better-than-expected economic growth, with a 4% expansion in gross domestic product for 2024, surpassing the trade ministry's forecast of about 3.5%.

In South Korea, political tensions escalated as Acting President Choi Sang-mok rejected the resignation of his advisers, indicating ongoing instability.

Real Estate Trends

Recent statistics showed that Australian house prices experienced their first decline in 22 months as buyers found themselves increasingly priced out of the market amid rising property supply.

Investment Trends

Abu Dhabi's Mubadala Investment Co. emerged as the most active sovereign wealth fund in 2024, increasing its investments across various sectors, including private credit and artificial intelligence. This marks a shift in focus as Saudi Arabia's Public Investment Fund reduced its spending and concentrated on domestic investments.

Looming challenges for investors as they enter 2025 include persistent inflation and the potential responses from the Federal Reserve. Market watchers are also keenly observing how the pro-growth policies of President-elect Donald Trump may influence consumer prices and federal financial health.

Upcoming Events

This week, key economic reports will be released including US construction spending, jobless claims, and manufacturing PMI.

Asia, Markets, Economy