Asian stocks mostly dipped on Friday as investors awaited key U.S. personal spending data for November, set to be released later in the day. U.S. futures and oil prices also saw declines.
Tokyo’s Nikkei 225 index dropped by 0.3% to 38,701.90 after Japan’s core inflation data exceeded expectations. The country’s core inflation rate, which excludes fresh food prices, rose 2.7% year-on-year in November, surpassing analysts’ forecasts. This report came on the heels of the Bank of Japan’s decision the previous day to maintain its benchmark interest rate at 0.25%, which strengthened the U.S. dollar against the yen. By midday, the dollar traded at 156.96 yen, down from 157.43 yen, but still well above the 150 yen mark from earlier in the month.
In Hong Kong, the Hang Seng index rose by 0.1% to 19,772.91, while Shanghai’s Composite index edged down by 0.1% to 3,367.20. China’s central bank decided to keep its loan prime rates unchanged, with the one-year lending rate remaining at 3.1% and the five-year rate, which impacts mortgage rates, staying at 3.6%.
Australia’s S&P/ASX 200 fell by 1.2% to 8,067.00, while South Korea’s Kospi dropped 1.3% to 2,404.02.
In the U.S., Thursday’s trading saw mixed results. The S&P 500 slipped 0.1% to 5,867.08, while the Dow Jones Industrial Average rose slightly by less than 0.1% to 42,342.24, recovering from a sharp drop of 1,123 points on Wednesday. The Nasdaq composite also fell 0.1% to 19,372.77.
Despite these declines, major indexes remain near record levels, and the S&P 500 is still on track for one of its best years of the millennium, with a gain of 23%.
Traders now anticipate that the Federal Reserve may only implement one or two interest rate cuts next year, according to data from CME Group. A month ago, many believed at least two rate cuts in 2025 were a near certainty. Lower interest rates typically benefit Wall Street by stimulating the economy and boosting investment prices, though they can also stoke inflation.
Treasury yields showed mixed movements after surging the previous day in response to expectations that the Fed may reduce its planned interest rate cuts for 2025. Economic reports released this week painted a mixed picture of the U.S. economy. One report revealed a 3.1% annualized growth rate for the summer, indicating stronger-than-expected growth. Despite the Fed maintaining its main interest rate at a two-decade high until recently, the economy has remained resilient.
Another report indicated a decrease in U.S. jobless claims, suggesting a robust job market, while a third report revealed an unexpected contraction in manufacturing in the mid-Atlantic region, defying expectations for growth.
In the bond market, the yield on the 10-year Treasury rose to 4.57% from 4.52% late Wednesday and from below 4.20% earlier in the month. Meanwhile, the two-year yield, more sensitive to short-term Fed actions, eased slightly to 4.31% from 4.35%.
In commodities, U.S. benchmark crude oil fell by 35 cents to $69.03 per barrel, while Brent crude declined 38 cents to $72.50 per barrel.
The euro strengthened against the U.S. dollar, rising to $1.0378 from $1.0367.
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