Asian markets were mostly down on Thursday as U.S. economic data sparked fears of prolonged inflation and higher interest rates. The concerns came after Wall Street ended a mixed session on Wednesday, with investors weighing strong economic indicators against potential monetary tightening.
Regional Market Highlights
In Japan, the Nikkei 225 fell 1.4% to 39,417.04, weighed down by a stronger yen and robust wage growth in November, which could prompt the Bank of Japan to consider interest rate hikes. The yen strengthened against the dollar, which fell to 157.78 yen from 158.36 yen the previous day.
China’s markets saw mixed results. The Hang Seng index in Hong Kong rose slightly by 0.1% to 19,296.89, while the Shanghai Composite dropped 0.3% to 3,220.72.
Australia’s S&P/ASX 200 slipped 0.4% to 8,312.20, while South Korea’s Kospi posted a marginal gain of less than 0.1%, closing at 2,521.67, buoyed by tech and automaker gains.
Elsewhere, Taiwan’s Taiex declined 1%, India’s Sensex dropped 0.3%, and Thailand’s SET index slid 1.3%.
U.S. Markets Take a Breather
Wall Street displayed modest recovery on Wednesday. The S&P 500 edged up 0.2% to 5,918.25, partially recouping its prior 1.1% loss. The Dow Jones Industrial Average rose 0.3% to 42,635.20, while the Nasdaq Composite slipped 0.1% to 19,478.88. The Russell 2000 index of smaller companies fell 0.5%.
Investor focus was divided between macroeconomic concerns and corporate developments. Edison International tumbled 10.2% as wildfires in California forced its utility, Southern California Edison, to preemptively cut power to nearly 120,000 customers.
Conversely, eBay surged 9.9% after announcing a pilot partnership with Meta Platforms to integrate select listings into Facebook Marketplace across the U.S., Germany, and France.
Economic Signals and Bond Market Trends
The bond market showed little movement as Federal Reserve Governor Christopher Waller reiterated expectations for further interest rate cuts in 2025, despite speculation that the Fed might halt its easing cycle. Waller downplayed the inflationary risks of potential tariffs under President-elect Donald Trump, maintaining a long-term downward outlook for inflation.
Treasury yields softened slightly, with the two-year yield dipping to 4.27% from 4.29%, and the 10-year yield easing to 4.67% from 4.69%. These levels remain significantly higher than September’s sub-3.65% range.
Economic data on Wednesday presented a mixed picture. A report showed private sector hiring in December slowed more than expected, fueling hopes that the Labor Department’s upcoming jobs report will support rate cuts without reigniting recession fears. However, unemployment benefit claims last week were lower than anticipated, signaling a resilient job market.
Corporate Spotlight
Cal-Maine Foods rose 1% after reporting better-than-expected quarterly profits, attributed to robust seasonal demand for eggs. CEO Sherman Miller highlighted higher sales volumes as a key driver.
Outlook
Global markets remain on edge as investors balance optimistic corporate developments with concerns over prolonged inflation and monetary policy uncertainty. U.S. market closures on Thursday for a National Day of Mourning in honor of former President Jimmy Carter may provide a brief respite, but eyes remain firmly fixed on Friday’s crucial jobs report for further direction.
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