Asian shares steady on Monday
Asian shares consolidated recent strong gains on Monday as Lunar New Year holidays kept trading thin across the region, while weaker-than-expected economic data from Japan tempered momentum in Tokyo.
Markets in China, South Korea, and Taiwan were closed, leaving currencies and bonds largely steady, though precious metals came under renewed pressure. Japan reported annualised growth of 0.2 per cent in the December quarter, well below forecasts of 1.6 per cent, as government spending weighed on activity, underscoring challenges facing Prime Minister Sanae Takaichi and bolstering the case for further fiscal stimulus.
Japan’s Nikkei 225 edged up 0.2 per cent after rising 5 per cent last week, while MSCI’s Asia Pacific ex Japan index gained 0.4 per cent. South Korea and Taiwan had surged 8.2 per cent and nearly 6 per cent respectively last week, driven by strong technology stocks, though investors warned that any pause in capital expenditure by major tech firms could trigger a correction in memory shares.
In the United States, futures for the S&P 500 and Nasdaq Composite rose modestly ahead of key data due later this week, including fourth quarter gross domestic product, forecast to show annualised growth of 3.0 per cent. Earnings season continues with results from Walmart expected to provide insight into consumer spending trends.
Rising artificial intelligence-related capital expenditure, estimated at $660 billion, has coincided with a 7 per cent annual drop in S&P 500 share buybacks, according to analysts at Goldman Sachs. Defensive stocks have benefited from a rotation out of technology amid concerns over elevated AI spending.
In bond markets, US two year Treasury yields fell to 3.408 per cent, their lowest close since mid 2022, as investors increased bets on Federal Reserve rate cuts. Futures indicate a 68 per cent probability of a cut in June.
The dollar index slipped last week, pressured mainly by a stronger yen, while the Swiss franc’s sustained rise fuelled speculation of possible intervention by the Swiss National Bank.
Attribution: Reuters