Asian equities showed resilience on Friday, rising amid Wall Street’s fifth consecutive day of losses. Gains in Australia, South Korea, and Hong Kong hinted at a potential recovery, while U.S. equity futures edged higher after the S&P 500 and Nasdaq 100 closed lower on Thursday. Markets in Japan remained closed for a holiday.
Chinese stocks, however, displayed volatility, reflecting lingering concerns over challenges in the world’s second-largest economy following its weakest start to a year since 2016.
Friday’s performance suggests the week-long selloff in U.S. equities might be losing steam, as investors recalibrate their portfolios for 2025 after a turbulent close to the previous year.
The recent decline in U.S. stocks was accompanied by a surge in the U.S. dollar, a favored safe-haven asset, which hit a two-year high on Thursday before softening early Friday. The yen gained ground after three consecutive days of losses against the dollar.
Donald Trump’s policies, particularly on tariffs, remain a point of focus for investors. “The inflationary nature of these policies could keep interest rates at mid-levels for an extended period,” noted Jung In Yun, CEO of Fibonacci Asset Management Global, during an interview with Bloomberg Television.
Treasuries saw modest gains on Thursday, but the 10-year yield stayed roughly 20 basis points above pre-December 18 levels, when Federal Reserve Chair Jerome Powell adopted a hawkish stance. Economic data offered little justification for rate cuts, with U.S. unemployment claims falling to an eight-month low, highlighting a labor market that continues to defy expectations.
Weak corporate results also weighed on U.S. stocks. Tesla Inc. reported a shortfall in fourth-quarter deliveries and its first annual sales decline in over a decade, leading to an 18% drop in the carmaker’s stock since Christmas. Meanwhile, emerging-market equities slipped to their lowest point since September, nearing a 10% drop from recent highs in October.
Market volatility underscores uncertainty heading into the corporate earnings season. Lisa Shalett of Morgan Stanley Wealth Management described 2025 as a “show-me year,” expressing doubts about the continued dominance of the so-called Magnificent Seven—tech giants that fueled much of the market’s growth last year. “The notion that these stocks can collectively lead the market may falter in 2025,” Shalett remarked, adding that the late-2024 slide might not yet signal broader troubles.
Despite recent losses, the S&P 500 has posted a remarkable two-year gain of over 50%, its best performance since the late 1990s, largely powered by optimism surrounding artificial intelligence’s impact on tech sector profits.
Political developments remain in focus, with investors watching Friday’s U.S. House Speaker vote to determine whether Mike Johnson retains his position. Political infighting among Republicans could pose challenges for President-elect Trump’s policy agenda, according to Tom Essaye, founder of the Sevens Report.
In commodities, oil prices extended their rally into a fifth day following reports of shrinking U.S. crude stockpiles. Gold held steady after two days of gains, having recorded its strongest annual performance since 2010. Meanwhile, Bitcoin fell, snapping a three-day streak of increases.
As global markets navigate uncertainty, investors appear to be cautiously optimistic, seeking opportunities while remaining vigilant against emerging risks.
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Asian Markets Mixed as Investors Eye 2025; Yen Stays Weak Amid Rate Speculations
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