Asian stocks climb to six-week highs on Monday
Asian stocks climbed to six-week highs on Monday, while the dollar hovered near its weakest level in almost three months, as expectations of Federal Reserve rate cuts next year continued to drive risk appetite and fuel volatility in precious metals.
MSCI’s broad Asia Pacific index rose 0.27 per cent to its highest level since early October, capping a strong year-end rally driven largely by technology stocks. South Korea’s Kospi advanced 1.5 per cent to a near two-month peak, extending its year to date gain to around 74 per cent, its strongest performance since 1999. Taiwan equities edged up 0.3 per cent to a record high, while Japan’s Nikkei slipped 0.4 per cent.
Market sentiment was also influenced by geopolitical developments after US President Donald Trump said Washington and Kyiv were moving closer to an agreement to end the war in Ukraine.
Investor focus this week will turn to minutes from the Fed’s latest policy meeting due on Tuesday, which are expected to provide further insight into the central bank’s thinking on the pace of future easing. The Fed cut rates earlier this month and projected one more cut next year, while markets are pricing in at least two.
In currency markets, the Japanese yen firmed 0.2 per cent to 156.13 per dollar after a slightly hawkish summary of opinions from the Bank of Japan’s December meeting signalled growing support among policymakers for further rate increases. However, the yen remains near a 10-month low, keeping intervention risks in view.
The dollar index slipped 0.08 per cent to 97.953 and is on track for a 9.7 per cent annual decline, its steepest fall since 2017, as expectations of Fed easing continue to weigh on the greenback.