The Hang Seng Index extended its winning streak to three weeks in the week ended December 13, rising 0.53%. Expectations for a Fed rate cut in December contributed to gains, in addition to the Politburo announcement. However, the CEWC’s measures resulted in the Index making modest gains this week.
The Hang Seng Mainland Properties Index ended the week down 1.30% as stimulus measures left much to be desired. However, the Hang Seng Tech Index traded higher on Fed rate bets. Technology giants Baidu (9888) and Alibaba (0700) posted weekly gains of 2.24% and 2.14% respectively.
Conversely, mainland markets ended the week in the red, with the CSI 300 and Shanghai Composite down 1.01% and 0.36% respectively.
Gaining raw materials through demand optimism
Iron Ore Spot ended the week up 1.56%. Investors’ hopes that Chinese stimulus measures would boost demand for iron ore pushed prices higher. CN thread reported the increasing supply of iron ore in Chinese ports, which contributed to profits.
Meanwhile, gold rose 0.57% to $2,648, ending a two-week losing streak. On December 7, CN Wire announced China increased gold reserves for the first time since May, causing gold prices to rise.
ASX 200 stumbles as Australian labor market data tests RBA rate cuts
Australia’s ASX 200 fell 1.48% in the week ending December 13. Banking and technology stocks posted heavy losses, overshadowing rising gold and mining stocks.
The S&P/ASX All Technology Index fell 4.32%. Banking giants ANZ (ANZ) and National Australia Bank (NAB) posted heavy weekly losses. News of CEO Shayne Elliot’s retirement plans and rising U.S. Treasury yields weighed on bank stocks. Higher yields on US government bonds lead to lower demand for high-yield Australian bank shares.
Nikkei index advances thanks to gains in technology stocks and losses in yen
In the week ending December 13, the Nikkei index gained 0.97%. The USD/JPY rose 2.41% to end the week at 153.579, boosting demand for export-linked stocks. A weaker Japanese yen could increase foreign earnings contributions and demand for Japanese goods, potentially lifting stock prices.
Market bets on a Fed rate cut and expectations that the Bank of Japan will hold firm next week added to the weekly gains.
Major contributors included Sony Corp. (6785), which rose 6.81%, while Toyota Motor Corp. (7203) 2.61% won. Softbank Group Corp. (9984) improved by 3.08%.
Outlook: Central Banks in Focus – What impact will the Fed’s decision have on your portfolio?
The US Federal Reserve and the Bank of Japan will dominate market sentiment in the coming week.
An aggressive stance from the Fed, even with a rate cut, could boost demand for US dollars while weighing on riskier assets. The BoJ could have more influence with an unexpected rate cut. Fears that a carry trade in the yen will decline could add to broader market nerves.
Key economic indicators, including preliminary private sector PMIs, US retail sales, Japanese inflation data and monthly statistics from China, also require attention. Mixed data could fuel policy uncertainty, potentially putting pressure on Asian equity markets.