Asian Shares Fall, Treasury Yields Hit Yearly High - Read Now
Global markets faced volatility this week as Asian shares dropped and long-term U.S. Treasury yields recorded their worst performance in a year. A strong U.S. dollar, cautious sentiment around global rate cuts, and policy uncertainty in China added to the mix.
Asian Shares Dip Amid Market Concerns
The MSCI Asia-Pacific Index, excluding Japan, slid 0.5% during Friday’s trade. Japan’s Nikkei shed 1% but remains on track for a weekly gain of 0.9%. Meanwhile, China’s blue-chip index fell 0.7%, and Hong Kong’s Hang Seng dropped 1.2% as the Central Economic Work Conference failed to outline robust stimulus measures.
A subindex of Chinese property firms listed in Hong Kong plunged 2.6%, reflecting market disappointment. Jian Chang, chief China economist at Barclays, noted that the meeting likely underwhelmed investors, who were expecting more aggressive easing following earlier statements from Chinese policymakers.
Treasury Yields Record Worst Week in a Year
Long-term U.S. Treasury yields surged, with the 30-year yield climbing 22 basis points, marking the steepest weekly rise since October 2023. The 10-year benchmark yield rose 17 basis points to 4.32%, while the two-year yield jumped 9 basis points to 4.19%.
This sharp increase stems from receding expectations for significant Federal Reserve rate cuts in 2025. Futures suggest minimal chances of a rate adjustment in January, with rates likely ending at 3.8% by 2025.
Strong Dollar Dominates Currency Markets
The U.S. dollar emerged as the week’s strongest performer, gaining 1% against major peers. It rose 1.8% against the Japanese yen, reflecting reduced expectations for a rate hike from the Bank of Japan next week. Sources indicate the BOJ is inclined to keep rates steady.
The dollar also gained 1.6% on the Swiss franc, trading near a five-month high of 0.8957. This followed an unexpected 50-basis-point rate cut by the Swiss National Bank, which surprised economists.
Global Rate Cuts and Market Reactions
This week, rate cuts from Switzerland, Canada, and the European Central Bank emphasized diverging monetary policies. In Europe, rates are projected to drop to 1.75% by 2025, compared to the current 3%. Canada’s rates are expected to fall from 3.25% to 2.7% within the same timeframe.
In contrast, the U.S. Federal Reserve is anticipated to take a cautious approach to rate adjustments. Goldman Sachs revised its forecast for the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, projecting a modest monthly increase of 0.13%.
Oil and Gold: Weekly Performance Highlights
In the commodities market, oil prices edged lower on Friday but are set for weekly gains. U.S. West Texas Intermediate (WTI) settled at $69.95 per barrel, reflecting a 4% weekly increase. The European Union's new sanctions on Russian oil exports contributed to the price hike.
Gold prices climbed 2% this week to $2,690 per ounce, benefiting from market uncertainty and a weaker economic outlook. However, the metal remains below its record high of $2,790.
Wall Street and Nasdaq Performance
Wall Street saw mixed sentiments as investors booked profits from Nasdaq’s relentless rally to record highs. Despite Thursday’s dip, Nasdaq futures rose 0.4% in Asia, reflecting optimism for the tech-heavy index.
Also Read: Zomato GST Tax Demand: Key Updates on Rs 803 Crore Case - Read Now
