Asian stocks edged lower on Tuesday in cautious trading as the year draws to a close.
Concerns about US President-elect Donald Trump’s potential protectionist trade policies pushing inflation higher next year have dampened sentiment in the fag end of the year.
Trading volumes were light due to the upcoming New Year holiday, with several markets on a break for the rest of the week.
The seasonal Santa rally appeared to lose momentum, as elevated Treasury yields weighed on high equity valuations.
Japan and South Korea’s markets are closed for the New Year’s Eve holiday, while markets in Australia, New Zealand, Singapore, and Hong Kong will close early for the holiday.
China’s CSI300 index traded flat, while Hong Kong’s Hang Seng index rose by 0.3% in early trading.
Ahead of the release of the PMI figures, the Hang Seng Index dipped to an intraday low of 20,003.
The data release provided a boost to investor sentiment, driving demand for Hong Kong-listed stocks and pushing the index to a morning high of 20,127.
Looking ahead, the market focus shifts to China’s Caixin Manufacturing PMI, scheduled for release on Thursday.
With the Hang Seng Index up 19% year-to-date and on track to end a four-year losing streak.
The Australian stock market is significantly lower, extending losses from the previous session.
The benchmark S&P/ASX 200 index is down 53.70 points, or 0.65%, at 8,181.30, having touched a low of 8,168.70 earlier.
Weakness in mining, financial, and technology stocks has weighed on the market, though energy stocks have provided some support.
Across the rest of Asia, New Zealand is down 1.2%, while, Singapore, Malaysia, and Taiwan are down by between 0.1% and 0.7%.
Wall Street sees sharp decline on Monday
US stocks opened sharply lower on Monday, extending the sell-off from last Friday, but managed to recover some ground by the close.
Despite the partial rebound, the major indices remained firmly in negative territory, adding to the previous session’s steep losses.
The Dow Jones Industrial Average pared its intraday decline of over 700 points to close down 418.48 points, or 1.0%, at 42,573.73.
Similarly, the tech-heavy Nasdaq Composite dropped 235.25 points, or 1.2%, to 19,486.78, while the S&P 500 slipped 63.90 points, or 1.1%, to finish at 5,906.94.
The early sell-off reflected profit-taking as some traders locked in gains ahead of the year’s end.
This cautious sentiment weighed on the markets, despite 2024 being a strong year for equities, with the Nasdaq still up nearly 30% year-to-date.
Technology stocks, which contributed to the early declines, trimmed some of their losses but ended the day notably lower, reflecting continued pressure on the sector.
On Thursday, key US economic data, including construction spending, jobless claims, and the manufacturing PMI, will be released, offering insights into the economy’s performance.
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