Most Asian Stocks Decline After US Tech Losses: Markets Wrap

Asian stocks were mostly lower in early trading after US equities dropped on Friday, led by losses in technology shares. 

The MSCI Asia Pacific Index snapped a five-day rally as shares slipped in Australia while Japan’s Nikkei 225 Stock Average also fell. Treasuries were little changed in early trading after yields climbed last week. Trading is likely to remain slim — amplifying potential moves — due to the year-end holiday season. 

“With the sour leads from US equity, we look to start the week on a soft tone to the Asian equity markets,” Chris Weston, head of research for Pepperstone Group, wrote in a note. “Again, local markets are at the mercy of any remaining end-of-year portfolio flows, and the potential for more active managers to reduce risk, sensing limited remaining reasons to chase the tape from here.” 

While Asian shares are trending lower Monday, they are still heading for a successful year. The MSCI Asia Pacific gauge has advanced 7.9% in 2024 as central banks eased monetary policy and tech stocks rallied amid optimism over artificial intelligence.

The S&P 500 index slipped 1.1% Friday while the Nasdaq 100 dropped 1.4%. While every major industry group saw losses, tech megacaps bore the brunt of the selling. That’s after a surge that has seen the so-called “Magnificent Seven” account for more than half of the US equity benchmark’s gains in 2024.

“Santa has already come — have you seen the performance this year?” said Kenny Polcari, a strategist at SlateStone Wealth LLC. The coming week “is another holiday-shortened week, volumes will be light, moves will be exaggerated. Don’t make any major investing decisions.”

Treasuries slipped last week, with the 10-year yield climbing 10 basis points to 4.63%, as the Federal Reserve signaled the likelihood of fewer interest-rate cuts in 2025. The Bloomberg Dollar Spot Index gained 0.5%, extending a winning year with gains driven by the anticipation of “America First” policies from President-elect Donald Trump. 

The dollar is still headed for its best year in almost a decade as US economic strength reins in expectations for the Fed rate cuts and President-elect Donald Trump’s threats of higher tariffs underpin bullish bets on the currency. 

In China, another set of steps to stoke private consumption for repairing the economy came out over the weekend. China’s central government urged local authorities to offer handouts to people struggling with the cost of living, Xinhua News Agency reported.

Jimmy Carter, the 39th president of the United States died Sunday at his home in Plains, Georgia. The US stock market has traditionally closed on the day of presidential funerals. No announcement has been made as of yet by exchange overseers.

This year’s rally in US equities has driven the expectations for stocks so high that it may turn out to be the biggest hurdle for further gains in the new year. The bar is even higher for tech stocks, given their gains in 2024.

Analysts estimate a nearly 30% earnings growth for the tech sector next year, but its market-cap share of the S&P 500 index implies closer to 40% growth expectations may be embedded in the stocks, according to a Bloomberg Intelligence study.

In commodities, oil slipped in quiet end-of-year trading, as the market focused on the outlook for 2025 while monitoring Middle East developments.

Key events this week: 

• China manufacturing PMI, non-manufacturing PMI, Tuesday

• New Year’s Day holiday, Wednesday

• US construction spending, jobless claims, manufacturing PMI, Thursday

• US ISM manufacturing, light vehicle sales, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 9 a.m. Tokyo time

• Hang Seng futures were little changed

• Japan’s Topix was little changed

• Australia’s S&P/ASX 200 fell 0.4%

• Euro Stoxx 50 futures rose 0.8%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0429

• The Japanese yen was little changed at 157.86 per dollar

• The offshore yuan was little changed at 7.3012 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $93,514.17

• Ether was little changed at $3,347.78

Bonds

• The yield on 10-year Treasuries was little changed at 4.63%

• Japan’s 10-year yield advanced 2.5 basis points to 1.110%

• Australia’s 10-year yield advanced eight basis points to 4.46%

Commodities

• West Texas Intermediate crude fell 0.3% to $70.41 a barrel

• Spot gold rose 0.1% to $2,624.43 an ounce

This story was produced with the assistance of Bloomberg Automation.