Asian equities largely advanced on Tuesday, driven by gains in technology stocks, as new U.S. export restrictions on chipmaking components and artificial intelligence technologies proved less severe than anticipated. Markets in Japan, South Korea, and Australia led the rally, while Chinese shares lagged amid currency pressures and economic concerns.
The Chinese yuan hit a one-year low against the dollar, reflecting worries over a slowing economy and strained U.S.-China relations. Meanwhile, U.S. futures held steady after the S&P 500 reached its 54th record close of the year, and the tech-heavy Nasdaq 100 gained more than 1% on Monday.
Market Sentiment Shifts on US Export Controls
Investors were relieved that the Biden administration’s new restrictions on tech exports to China avoided more sweeping measures, which had previously raised fears of broader sanctions on major Chinese firms. However, the optimism did little to bolster Chinese equities, as sentiment remains shaky due to the absence of new policy guidance from Chinese leadership after a highly anticipated meeting.
“As markets diverge, China underperforms while other Asian economies show resilience,” said Charu Chanana, Chief Investment Strategist at Saxo Markets. “This reflects the limited headwinds for ex-China economies from U.S. chip curbs and the supportive influence of a strong U.S. economy and global monetary easing.”
Currency and Bond Market Dynamics
The dollar edged higher in Asian trading, snapping a three-day losing streak, while the euro remained subdued following Monday’s sharp decline. In the U.S., Treasuries slipped after Fed Governor Christopher Waller signaled openness to a December rate cut, contingent on forthcoming economic data. Markets currently price a 70% likelihood of a quarter-point reduction in rates this month.
“This week is pivotal for economic data in 2024,” said Tom Essaye of The Sevens Report. “If the results hit a ‘Goldilocks’ scenario, investors may solidify expectations of a soft landing and a December rate cut.”
Wall Street and Global Markets
Wall Street reflected cautious optimism on Monday. The S&P 500 rose 0.2%, and the Nasdaq 100 advanced 1.1%, buoyed by tech gains. However, the Dow Jones Industrial Average dipped 0.3%. In after-hours trading, Tesla shares fell after a Delaware court rejected a proposed executive compensation package for CEO Elon Musk.
In Europe, French politics added to market volatility as Marine Le Pen threatened to unseat Prime Minister Michel Barnier’s government over a budget standoff. The turmoil pressured French stocks and bonds.
Commodities Hold Steady Ahead of Key Events
Oil prices inched higher as traders anticipated OPEC+’s decision on production levels at Thursday’s meeting. Gold remained range-bound, continuing its subdued trend from the past week.
As the global economic calendar unfolds, investors are bracing for critical events, including Friday’s U.S. payroll report and Federal Reserve Chair Jerome Powell’s remarks, which could shape the year-end interest rate outlook.
Related topics:
Asian Markets Rise on Wall Street’s Momentum, While Bitcoin and Oil Decline
Asian Shares Mixed as U.S. Markets Close for Thanksgiving, Oil Prices Rise
Asian Markets Show Mixed Performance Amid Trump’s Cabinet Appointments and Tariff Concerns
