Traders watch political turmoil in France, where the government is teetering on the brink of collapse
03 December 2024 - 08:06
byKevin Buckland
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Pedestrians walk past an electric monitor displaying the Japanese yen exchange rate against the US dollar outside a brokerage in Tokyo. Picture: KIM KYUNG-HOON/REUTERS
Tokyo — Asian stocks rose on Tuesday led by an outperforming tech sector after record highs on Wall Street overnight, while the dollar hovered near a six-week low to the yen as traders weighed the outlook for interest rates in the US and Japan.
Investors were also monitoring the political turmoil in France as the government there teetered on the brink of collapse, leaving the euro languishing close to a one-week low.
The Chinese yuan was also facing its own challenges from the growing threat of more US tariffs on China, pushing it down to a 13-month trough.
Japan’s tech-heavy Nikkei jumped 1.6% by 2am GMT, and South Korea’s Kopsi advanced 1.7%. Taiwanese shares gained 1.1%.
Australia’s stocks benchmark rose 0.7% and reached a record high.
However, Chinese stocks were under pressure, with Hong Kong’s Hang Seng edging slightly lower and mainland blue chips falling 0.3%.
MSCI'’s broadest index of Asia-Pacific shares added 0.7%.
Both S&P 500 and Nasdaq futures were flat after the cash indices renewed their record peaks on Monday, helped by strong gains for most of the so-called Magnificent 7 hi-tech stocks, including a nearly 19% surge for Facebook parent Meta Platforms and a 12% jump for Tesla.
“Equity hedges have been unwound, which speaks to a market confident of a grind higher into year-end,” said Chris Weston, head of research at Pepperstone, referring to the bull run for US equities, and particularly the “Mag7”.
“Microsoft and Meta would be my picks that lead us higher from here.”
Microsoft advanced 7.5% overnight. The other Mag7 stocks are Google parent Alphabet, Amazon, Apple and Nvidia.
In currencies, the dollar added 0.2% to ¥149.87, but remained not far from Monday’s low of ¥149.09, the weakest level since October 21.
The dollar received some support overnight from better-than-expected US manufacturing data, which also showed a mitigation in price increases. However, the greenback came under renewed pressure as Federal Reserve governor Christopher Waller said he was “leaning towards” a rate cut on December 18.
Traders currently see about a 75% chance of a quarter-point cut at this month’s Fed meeting, up from 66% a day earlier and 52% a week ago, according to CME’s FedWatch Tool.
The two-year US treasury yield dipped to 4.1776% on Tuesday, heading back towards the four-week low of 4.1550% from Friday.
Jolts job openings — a preferred gauge of Fed officials — are due later on Tuesday, ahead of the all-important monthly payrolls figures on Friday.
The yen, meanwhile, has been supported by rising speculation that the Bank of Japan (BoJ) will raise rates by a quarter point on December 19, with traders currently putting the odds at around 58%.
“Providing USD/JPY remains below the ¥151/¥152 resistance zone, the risks are for a deeper decline towards ¥145.00, which may prove too conservative if the BoJ hikes rates and the Fed cut rates,” said Tony Sycamore, an analyst at IG.
The euro eased 0.1% to $1.0488, after dropping about 0.7% overnight and hitting lows of $1.046125.
The French government appeared all but certain to collapse later this week after far-right and left-wing parties submitted no-confidence motions on Monday against Prime Minister Michel Barnier.
Sterling was stable at $1.2654.
The yuan sank as low as 7.3145 to the dollar in offshore trading, the weakest since November of last year.
US president-elect Donald Trump demanded at the weekend that Brics member countries — which include China and SA — commit to not creating a new currency or supporting another currency to replace the dollar or face 100% tariffs.
Less than a week earlier, he had threatened China with an additional 10% levy on top of a campaign pledge of tariffs in excess of 60% on Chinese goods.
Gold remained mired around $2,635, after its retreat from a record peak of $2,790.15 on October 1.
Oil prices were steady near two-week lows. Brent crude futures eased 3c to $71.80 a barrel, and US West Texas Intermediate (WTI) crude declined 5c to $68.06 a barrel.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Asian shares follow Wall Street’s lead
Traders watch political turmoil in France, where the government is teetering on the brink of collapse
Tokyo — Asian stocks rose on Tuesday led by an outperforming tech sector after record highs on Wall Street overnight, while the dollar hovered near a six-week low to the yen as traders weighed the outlook for interest rates in the US and Japan.
Investors were also monitoring the political turmoil in France as the government there teetered on the brink of collapse, leaving the euro languishing close to a one-week low.
The Chinese yuan was also facing its own challenges from the growing threat of more US tariffs on China, pushing it down to a 13-month trough.
Japan’s tech-heavy Nikkei jumped 1.6% by 2am GMT, and South Korea’s Kopsi advanced 1.7%. Taiwanese shares gained 1.1%.
Australia’s stocks benchmark rose 0.7% and reached a record high.
However, Chinese stocks were under pressure, with Hong Kong’s Hang Seng edging slightly lower and mainland blue chips falling 0.3%.
MSCI'’s broadest index of Asia-Pacific shares added 0.7%.
Both S&P 500 and Nasdaq futures were flat after the cash indices renewed their record peaks on Monday, helped by strong gains for most of the so-called Magnificent 7 hi-tech stocks, including a nearly 19% surge for Facebook parent Meta Platforms and a 12% jump for Tesla.
“Equity hedges have been unwound, which speaks to a market confident of a grind higher into year-end,” said Chris Weston, head of research at Pepperstone, referring to the bull run for US equities, and particularly the “Mag7”.
“Microsoft and Meta would be my picks that lead us higher from here.”
Microsoft advanced 7.5% overnight. The other Mag7 stocks are Google parent Alphabet, Amazon, Apple and Nvidia.
In currencies, the dollar added 0.2% to ¥149.87, but remained not far from Monday’s low of ¥149.09, the weakest level since October 21.
The dollar received some support overnight from better-than-expected US manufacturing data, which also showed a mitigation in price increases. However, the greenback came under renewed pressure as Federal Reserve governor Christopher Waller said he was “leaning towards” a rate cut on December 18.
Traders currently see about a 75% chance of a quarter-point cut at this month’s Fed meeting, up from 66% a day earlier and 52% a week ago, according to CME’s FedWatch Tool.
The two-year US treasury yield dipped to 4.1776% on Tuesday, heading back towards the four-week low of 4.1550% from Friday.
Jolts job openings — a preferred gauge of Fed officials — are due later on Tuesday, ahead of the all-important monthly payrolls figures on Friday.
The yen, meanwhile, has been supported by rising speculation that the Bank of Japan (BoJ) will raise rates by a quarter point on December 19, with traders currently putting the odds at around 58%.
“Providing USD/JPY remains below the ¥151/¥152 resistance zone, the risks are for a deeper decline towards ¥145.00, which may prove too conservative if the BoJ hikes rates and the Fed cut rates,” said Tony Sycamore, an analyst at IG.
The euro eased 0.1% to $1.0488, after dropping about 0.7% overnight and hitting lows of $1.046125.
The French government appeared all but certain to collapse later this week after far-right and left-wing parties submitted no-confidence motions on Monday against Prime Minister Michel Barnier.
Sterling was stable at $1.2654.
The yuan sank as low as 7.3145 to the dollar in offshore trading, the weakest since November of last year.
US president-elect Donald Trump demanded at the weekend that Brics member countries — which include China and SA — commit to not creating a new currency or supporting another currency to replace the dollar or face 100% tariffs.
Less than a week earlier, he had threatened China with an additional 10% levy on top of a campaign pledge of tariffs in excess of 60% on Chinese goods.
Gold remained mired around $2,635, after its retreat from a record peak of $2,790.15 on October 1.
Oil prices were steady near two-week lows. Brent crude futures eased 3c to $71.80 a barrel, and US West Texas Intermediate (WTI) crude declined 5c to $68.06 a barrel.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.