Most Gulf bourses ease on US rate viewpoint
Most Gulf stock markets were subdued in early trade on Wednesday, in line with Asian shares, as traders wagered the US Federal Reserve will likely be slow in cutting interest rates after data showed the US economy remained stable.
Investor focus in 2025 will likely be on shifting US rate expectations, the growing divergence in policy path between US and other economies and the threat of tariffs once President-elect Donald Trump steps into the White House on Jan. 20.
The Fed in December projected just two rate cuts for 2025, lower than the four it had earlier predicted.
Markets are currently pricing in even less than that at 38 basis points, with the first cut fully priced in for July.
Data on Tuesday showed US job openings unexpectedly increased in November while hiring softened, suggesting the labour market slowed at a pace that probably does not require the Fed to be in a rush to cut rates.
European shares inch higher
European shares advanced slightly on Wednesday, led by heavyweight healthcare and financial stocks, while focus remained on the global monetary policy trend in the New Year.
The pan-European STOXX 600 added 0.2 percent as of 0821 GMT, hovering near its highest level in three weeks.
Financial services was amongst the top sub-sectors, adding 1.1 percent with EQT gaining 2.6 percent after Deutsche Bank upgraded the investment company to “buy” from “hold”.
Healthcare added 0.4 percent, with index heavyweight Novo Nordisk up 1.6 percent, while banks gained 0.8 percent with HSBC advancing 1.2 percent.
Capping gains, however, yield on Germany’s 10-year bond, the region’s benchmark, eased slightly but hovered near its highest level two months. Government bond yields around the world rose tracking US Treasuries after data on Tuesday raised concerns that the Federal Reserve might slow down its pace of policy easing.
South Korean stocks rise for fourth session
South Korean shares rose on Wednesday for a fourth straight session, as Samsung Electronics gained after Nvidia CEO Jensen Huang said he believes the Korean company is capable of creating a new design on high-bandwidth memory (HBM) chip. The won strengthened, while the benchmark bond yield fell.
The benchmark KOSPI was up 27.13 points, or 1.09 percent, at 2,519.23, as of 0158 GMT.
Among index heavyweights, chipmaker Samsung Electronics rose 2.53 percent and peer SK Hynix gained 0.05 percent, while battery maker LG Energy Solution climbed 1.92 percent.
Nvidia’s Huang told reporters in Las Vegas on Tuesday that Samsung has to “engineer a new design” to supply HBM chips to his company, adding that “they can do it and they are working very fast,” Korea JoongAng Daily reported.
Japan’s Nikkei tracks wall street lower
Japan’s Nikkei share average fell on Wednesday, tracking overnight Wall Street declines after a batch of upbeat US economic data raised concerns that sticky inflation could slow the Federal Reserve’s pace of monetary easing.
The Nikkei index declined 0.6 percent to 39,843.84, as of 0153 GMT, with 163 of its 225 components falling, 60 rising and two trading flat.
The broader Topix index slid 0.75 percent, with growth shares dropping 0.92 percent, compared with a 0.57 percent slide for value shares The US S&P 500 sank 1.1 percent on Tuesday, after a report showed services sector activity accelerated in December, with a measure tracking input prices surging to a nearly two-year high.
Interest rate-sensitive tech shares slid, with the tech-heavy Nasdaq index dropping 1.9 percent.
Chip shares initially fell in Tokyo, but many rebounded over the course of the morning, with Nomura strategist Kazuo Kamitani pointing to Nvidia’s presentation at CES overnight for generating new buzz for the sector.
Australia shares rebound
Australian shares reversed course to trade sharply higher on Wednesday, as a key inflation print for November boosted hopes for a rate cut in February.
The S&P/ASX 200 index rose as much as 0.9 percent to 8,356.1 points as of 0315 GMT, after having dropped 0.3 percent earlier in the day.
Australia’s closely watched underlying inflation measure slowed to 3.2 percent in November from 3.5 percent in the prior month, data from the Australian Bureau of Statistics showed.
“Today’s inflation data has seen money markets price in the probability of a rate cut in February to 76 percent chance, with a now expected 3 cuts for calendar year 2025 or 75 basis points total,” said Jesse Moors.
India’s benchmark indexes set for a muted begin
India’s benchmark indexes are set for a muted start on Wednesday, tracking other Asian peers, after upbeat US data pointed to a strong economy and bolstered the case for fewer rate cuts from the Federal Reserve.
The GIFT Nifty futures were trading at 23,775 as of 7:58 a.m. IST, indicating that the benchmark Nifty 50 would open near Tuesday’s close of 23,707.9.
Other Asian markets were off to a muted start as well, with the MSCI Asia ex-Japan index shedding 0.2 percent.
Wall Street equities closed lower overnight after data showed that US services sector activity accelerated in December, while job openings increased in November.