Asia-Pacific Market Update
Asia-Pacific Market Update
Asian equities mostly extended gains from Wall Street’s recovery, although Chinese markets lagged behind due to disappointing corporate earnings and underwhelming government comments on trade. The ASX 200 climbed as energy stocks led advances, while weaker-than-expected PMI data had little impact on sentiment. The Nikkei 225 rose, bolstered by confirmation of Japan’s ¥39 trillion stimulus package, though inflation data printed mostly in line with expectations. In contrast, the Hang Seng and Shanghai Composite struggled, weighed down by Baidu’s disappointing earnings and a net liquidity drain by the PBoC. Sentiment was further dampened by uninspiring remarks from Vice Commerce Minister Wang on foreign trade.
European Equities
European equity futures pointed to a positive start, with the Euro Stoxx 50 futures up 0.3% following Thursday’s 0.6% cash market gain. Investors are focusing on the release of flash PMI data across the Eurozone, UK, and U.S., as well as speeches from key ECB officials, including Christine Lagarde and Isabel Schnabel. Market participants remain cautious amid persistent geopolitical tensions.
US Market Outlook
U.S. stocks ended Thursday higher after overcoming early fears of geopolitical escalation. Initial panic over Russia’s missile strike on Ukraine, initially reported as an ICBM, subsided after Western officials clarified it was an intermediate-range missile. Nvidia’s positive earnings report also buoyed sentiment, helping the S&P 500 gain 0.53%, with the Dow rising 1.06% and the Russell 2000 leading with a 1.65% increase.
The Trump administration continues to shape its economic team, with Kevin Warsh reportedly being considered for Treasury Secretary and later Fed Chair. Pam Bondi was nominated for Attorney General, following Matt Gaetz’s withdrawal from the running.
Fixed Income
U.S. Treasury yields stabilized after recent geopolitical-driven movements, with demand tempered by a weak TIPS auction. Bunds consolidated their gains from earlier safe-haven flows, while JGBs traded higher following Japanese CPI data that aligned with expectations.
Commodities
Crude oil prices held steady, supported by ongoing tensions following Russia’s missile strike on Ukraine. Goldman Sachs projected short-term upside risks to Brent, potentially reaching the mid-$80s in early 2025 if sanctions on Iran tighten further. Gold extended its gains above $2,600/oz as investors sought safety, while copper retreated amid weak sentiment in China, its largest consumer.
Currencies
The dollar remained firm above the 107.00 level, supported by geopolitical concerns and robust short-term yields. The euro hovered near yearly lows below 1.0500, weighed down by weak EU consumer confidence and expectations of ECB rate cuts. The pound remained subdued under 1.2600 ahead of UK Retail Sales data. Meanwhile, the yen traded rangebound near 155.00 after geopolitical concerns briefly lifted its demand earlier in the week.
Crypto
Bitcoin continued its record-setting rally, briefly surpassing $99,000. Reports emerged that former CFTC Chairman Chris Giancarlo is being considered for a “crypto czar” role under the Trump administration, signaling heightened regulatory attention for the sector.
Geopolitics
Geopolitical tensions remained elevated, particularly in Eastern Europe and the Middle East. Russia’s missile strike on Ukraine drew sharp criticism from Ukrainian President Zelenskiy, who called it a severe escalation. U.S. officials, however, downplayed the strategic significance of the missile, noting it was likely intended to intimidate rather than alter the conflict’s dynamics. In the Middle East, Israel intensified military operations, prompting evacuations in southern Lebanon. The IAEA passed a resolution demanding Iran improve cooperation by 2025, adding to regional uncertainties.
Notable Events Today
Flash PMIs from the Eurozone, UK, and U.S. will provide fresh insights into economic conditions. UK Retail Sales data is also expected, alongside speeches from ECB’s Lagarde, de Guindos, and Schnabel, as well as Fed’s Bowman. Markets will closely watch these releases for potential shifts in policy sentiment and further signs of economic momentum.
