Asian markets experienced a downward shift from earlier highs as apprehension regarding China’s economic struggles weighed on the nation’s equities. Chinese commercial lenders maintained their benchmark lending rates, aligning with the central bank’s recent decision to refrain from cutting borrowing costs. On the flip side, the S&P 500 achieved a record high on Friday, marking a two-year milestone, primarily propelled by the technology sector. In Asia, U.S. stock futures continued their upward trajectory.
Oil prices stabilized after an initial decline, attributed to OPEC member Libya resuming production from its largest field, counterbalancing concerns about escalating tensions in the Middle East. The Bank of Japan commenced a two-day policy meeting on Monday, with predictions overwhelmingly favoring unchanged settings when the results are announced on Tuesday.
The dollar exhibited weakness against most Group-of-10 peers, retracing gains observed earlier this month amid speculation about the Federal Reserve’s policies orchestrating a gentle landing for the U.S. economy. Treasuries saw a slight uptick, with 10-year yields dropping by one basis point. Friday’s boost in benchmark notes, influenced by a “Fed-friendly” University of Michigan survey reflecting high consumer confidence and lower inflation expectations, added to the nuanced market dynamics.
Investors remain vigilant for signals from Fed Chair Powell that might clarify the pace of potential easing. There’s a cautious eye on the risk of a speculative bubble fueled by funds transitioning from interest-bearing assets to stocks and bonds. Additionally, attention is directed toward Thursday’s first estimate of U.S. fourth-quarter GDP, central bank meetings in Canada and Europe, and the inaugural readings of European purchasing managers’ surveys for 2024.