Asian stock markets began the week with mixed results following a sharp decline in U.S. shares, marking their worst performance since Election Day.
In Japan, the Nikkei 225 index fell by 1%, closing at 38,255.65. The decline came as the Japanese yen strengthened against the U.S. dollar after comments from Bank of Japan Governor Kazuo Ueda suggested that interest rate hikes would continue as long as economic conditions allow. The dollar dropped to 154.46 yen, down from 154.54 yen on Friday, after briefly surpassing 156 yen last week.
Meanwhile, South Korea’s Kospi index surged by 2%, reaching 2,465.60, driven by a major announcement from Samsung Electronics. The tech giant revealed a share buyback plan, causing its stock to jump by 6%.
In China, stocks saw positive movement with the Hang Seng in Hong Kong rising 1.2% to 19,655.58 and the Shanghai Composite gaining 1.2% to 3,372.18. The rally followed data showing increased retail spending, a sign that government stimulus measures might be boosting the economy.
Other markets across Asia showed slight gains, with Australia’s S&P/ASX 200 rising 0.1% to 8,295.40, Taiwan’s Taiex falling 0.8%, and the SET index in Bangkok increasing by 0.6%.
U.S. markets, however, faced a difficult end to the week. On Friday, the S&P 500 fell 1.3% to 5,870.62, marking its worst day since the pre-Election period. The Dow Jones Industrial Average dropped 0.7% to 43,444.99, and the Nasdaq Composite declined 2.2% to 18,680.12.
The biotech sector was among the hardest hit, particularly vaccine manufacturers like Moderna and Pfizer, which saw their stocks fall 7.3% and 4.7%, respectively. This slump followed President-elect Donald Trump’s comments about potentially appointing Robert F. Kennedy Jr., a well-known anti-vaccine activist, as the head of the Department of Health and Human Services. While Kennedy’s appointment still requires Senate confirmation, investors expressed concerns about potential profit declines in the vaccine sector.
Other biotechnology stocks also faced heavy losses, but the steepest drop in the S&P 500 came from Applied Materials, which fell 9.2%. The company issued a revenue forecast below analysts’ expectations, despite reporting a stronger-than-expected quarterly profit.
Despite last week’s downturn, the S&P 500 remains up 23% for the year, not far from its all-time high reached on Monday. However, there are growing concerns about the sustainability of such gains, especially as companies face pressure to meet high growth expectations following their rapid stock price increases.
The market’s rally since Election Day had been fueled by optimism over Trump’s policies, including tax cuts, deregulation, and tariffs. However, investors are increasingly wary about the potential long-term consequences of his administration, such as ballooning government deficits and rising inflation. This uncertainty has prompted traders to reassess expectations for future interest rate cuts by the Federal Reserve.
Earlier this month, the Fed lowered its key interest rate for the second time in 2024, and market forecasts had suggested additional cuts through 2025. However, Federal Reserve Chair Jerome Powell signaled caution last Thursday, noting that the economy is not showing signs of urgency for further rate reductions. Powell also refrained from commenting on how Trump’s policies might impact the Fed’s decisions.
In economic news, a report released on Friday showed that U.S. consumer spending exceeded expectations, signaling that the U.S. economy remains resilient despite concerns about inflation and the broader economic outlook.
On the commodities front, U.S. benchmark crude oil rose by 17 cents to $67.19 per barrel in early Monday trading, while Brent crude increased by 29 cents to $71.33 per barrel.
The euro gained slightly, trading at $1.0539, up from $1.0534 late Friday.
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