Hang Seng Index Gains as Tencent Surges; Nikkei and ASX Diverge

US Markets Mixed Amid Upbeat US Economic Data

Global markets brace for turbulence as inflation, central banks, and economic growth take center stage.

Here’s how US equity markets performed on Thursday, December 19.

US equity markets had a mixed Thursday session. The Nasdaq Composite Index and the S&P 500 extended their losses from Wednesday, falling 0.10% and 0.09%, respectively. Meanwhile, the Dow ended its ten-day losing streak, edging 0.04% higher.

In the bond markets, 10-year US Treasury yields climbed to 4.594%, the highest level since May 30, driven by strong US economic data.

US Labor Market Supports Fed Rate Path Projection

On Thursday, US initial jobless claims and GDP data supported the Fed’s less dovish rate path outlook. Initial jobless claims fell from 242k (week ending December 7) to 220k (week ending December 14). A tighter labor market could support wage growth, fueling consumer spending and demand-driven inflation. Rising inflation would force the Fed to delay rate cuts to curb spending.

Meanwhile, the US economy expanded by 3.1% quarter-on-quarter in Q3, up from a preliminary 3.0%. Stronger growth in Q3 and upbeat Q4 economic data suggest a robust US economy, aligning with the Fed’s more upbeat economic projections for 2025.

Will Japan’s Inflation Numbers Fuel Rate Hike Bets?

On Friday, December 20, inflation figures from Japan could pressure the Bank of Japan into a January interest rate hike. The annual inflation rate accelerated from 2.3% in October to 2.9% in November, rising further from the Bank’s 2% target. Core inflation also trended higher, with ex-food and energy inflation rising to 2.4%, up from 2.3% in October.

The USD/JPY reacted to the hotter-than-expected data, falling 0.18% to 157.120 in the morning session. The pair had climbed to a pre-inflation report high of 157.923 before the retreat.

East Asia Econ, a research service specializing in the markets and macro of China, Japan, Korea, and Taiwan, commented on the inflation data:

“Today’s data show inflation excluding all food and energy in November at 2% saar. Some of the details are also firm, with the diffusion stable and a further pick-up in rental inflation. That though is still at less than 1%, and anyway, wage inflation now seems more important for the BOJ than CPI.”

Hang Seng Index Rises Amid Tech and Real Estate Trends

In Asian markets, the Hang Seng Index advanced by 0.48% on Friday morning. The tech sector contributed to the morning gains, with Tencent (0700) rallying 2.90%. Tencent is the second largest shareholder of Weimob (2013), which rallied a further 15% on Friday after announcing a gift-sending feature for WeChat. Weimob surged 36% on Thursday.

However, tech giants Alibaba (9988) and Baidu (9888) slid by 3.19% and 3.09%, respectively. Real estate stocks struggled after the People’s Bank of China (PBoC) left loan prime rates unchanged on Friday.

Mainland China markets had a mixed morning, with the CSI 300 falling 0.21% while the Shanghai Composite gained 0.16%.

Brian Tycangco, Editor/Analyst for Stansberry Research, remarked on the PBoC hold, stating,

“A little bit of a downer here. PBoC is not cutting LPR which is probably linked to mortgage rates rising a bit all over China this month. Banks are likely experiencing intense margin pressure. If RE demand recovery doesn’t sustain this month and going into the Lunar New Year, confidence is going away without a big fiscal stimulus.”

Nikkei Index Finds Support Amid BoJ Hesitancy

Japan’s Nikkei Index gained 0.20% on Friday morning. Thursday’s Bank of Japan monetary policy decision drove the USD/JPY pair to the 157 level, supporting demand for Japanese stocks. However, November’s inflation data and warnings about a possible intervention pulled the USD/JPY into negative territory on Friday morning, limiting further Index gains.

Japan’s top currency diplomat, Atsushi Mimura, reportedly said the government would take appropriate action against excessive forex moves.

Tokyo Electron (8035) advanced by 0.64%, with Sony Corp. (6758) rallying 3.13%, contributing to the gains.

ASX 200 Eyes Three-Day Losing Streak as Treasury Yields Climb

Meanwhile, Australia’s ASX 200 Index extended its losses from Thursday, falling 1.24%. Investors continued reacting to the Fed’s less dovish economic projections and Thursday’s upbeat US data.

Higher Treasury yields weighed on demand for high-yielding Aussie bank stocks. Commonwealth Bank of Australia (CBA) tumbled by 3.01%, while National Australia Bank (NAB) slid by 2.15%.

Gold stock Northern Star Resources (NST) fell 0.59% as gold prices remained subdued after Wednesday’s reversal.

Outlook: Data and Policy in Focus

Volatility is likely to persist as investors digest Fed and BoJ policy signals. Th upcoming US Personal Income and Outlays Report, details on Chinese stimulus measures, and US tariff developments will influence market sentiment.

Additionally, Beijing’s stimulus measures and US tariff threats remain critical factors. Traders should monitor global economic trends and trade developments to navigate the shifting landscape.

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