By Ray Wee
SINGAPORE (Reuters) – Asian stocks rose slightly in thin holiday trading on Thursday, extending gains made earlier in the week with little news or data that might change the direction of their movements, while the dollar remained near the highest level in two years. .
As the end of the year approaches, trading volumes have begun to ease and investors' main focus remains the Federal Reserve's interest rate outlook. Markets in Hong Kong, Australia and New Zealand were closed on Thursday for a holiday.
Since Fed Chairman Jerome Powell primed markets for smaller interest rate cuts next year at the central bank's final policy meeting of the year, traders are now pricing in roughly 35 basis points of easing for 2025.
This in turn led to higher US Treasury yields and the dollar, as the renewed strength of the dollar weighed on commodities and gold.
The benchmark 10-year yield settled at 4.5967%, after rising above 4.6% for the first time since May 30 earlier in the week. It has risen nearly 40 basis points for the month so far. The two-year return was similarly fixed at 4.3407%. (we/)
“Given the tight easing in December, we believe the Fed will skip the January FOMC meeting and wait for more data before resuming, or perhaps ending, this easing cycle,” said Tom Porcelli, chief US economist at PGIM Fixed Income.
“Given the Fed’s shift to less dovish coupled with continued focus on both sides of the dual mandate, we believe the market will focus more on economic events in the new year.”
In currencies, the dollar stabilized near the highest level in two years against a basket of currencies at 108.15, and is heading towards achieving monthly gains of more than 2%.
Meanwhile, the Australian and New Zealand dollars were among the biggest losers against the dominant US currency on Thursday, falling 0.45% to $0.6241. The price fell 0.51% to $0.5650.
The euro fell 0.18 percent to $1.0398, while the yen remained near its lowest level in five months and reached 157.45 per dollar in recent transactions.
The Japanese government is preparing to prepare a record $735 billion budget for the fiscal year starting in April due to rising social security and debt service costs, adding to the industrial world's heaviest debt, a draft seen by Reuters showed.
Ends on a high
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.04% and was on track for a weekly rise of about 2%, weighed down by its Wall Street counterparts earlier in the week.
Futures rose 0.02%, while Nasdaq futures advanced 0.13%.
EUROSTOXX 50 futures rose 0.04%.
Global stocks looked poised to end the year on a high with a second straight annual gain of more than 17%, unfazed by rising geopolitical tensions and various economic and political headwinds globally.
This is mostly due to a second year of huge gains for stocks on Wall Street, as the AI fever and strong economic growth have attracted more global capital into US assets.
“At first glance, markets seem to point to exceptional activity dominating 2024,” said Vishnu Varathan, head of macroeconomic research for Asia ex Japan at Mizuho (NYSE:) Bank.
“It is noteworthy that US bulls praising American exceptionalism have not trampled on enthusiasm elsewhere.”
It jumped 0.38% and was on track to end the year with gains of more than 17%.
China's blue-chip index fell 0.26% while the index lost 0.22%, although both are on track for annual gains of more than 10% each, thanks to intensifying support from Chinese authorities in recent months to support the faltering economy.
Elsewhere, bitcoin last traded 0.5% higher at $98,967, having fallen from a record high above $100,000 on the back of a tightening repricing by the Federal Reserve.
Russian Finance Minister Anton Siluanov said on Wednesday that Russian companies have begun using Bitcoin and other digital currencies in international payments after legislative changes that allowed this use in order to confront Western sanctions.
In commodities, futures rose 0.18% to $73.71 per barrel, while futures rose 0.21% to $70.25 per barrel. (or)
It rose 0.5% to $2,626.36 an ounce. (Ghoul/)
