Asia open: With a spring in their step

Stephen Innes SPI Asset Management

With a spring in their step, investors took Asia-Pacific markets higher on Monday, mirroring the gains in Wall Street after a rally in technology stocks propelled the S&P 500 to an all-time high on Friday.

The S&P 500 climbed 1.2% to 4839.81, breaking a streak of over 500 trading sessions without reaching a new record. The Dow Jones Industrial Average also hit a record, gaining 395 points or 1.1%, to close at 37863.80. The tech-heavy Nasdaq Composite rose 1.7%.

The Bull was untethered after Taiwan Semiconductor Manufacturing (TSMC) became the world's largest contract chipmaker. On Thursday, it projected more than 20% growth in 2024 revenue on booming demand for high-end chips used in AI.

A more positive mood among Americans from the University of Michigan survey suggests happier consumers are more likely to continue spending. Consumer spending accounts for around two-thirds of the U.S. economy. Other indicators also suggest that Americans are emerging from a period of pessimism.

According to a Federal Reserve Bank of New York survey, the share of consumers in December expecting to be financially better off a year later reached the highest level since June 2021. Additionally, a consumer confidence measure from the Conference Board in December saw its most significant one-month gain since March 2021.

U.S. futures may experience a holding pattern as major U.S. macro events and corporate profit reports featuring big Tech names like Tesla, Intel, Netflix, IBM, and Seagate take center stage amid the thick of earnings season.

The current state of Chinese stocks hovering around five-year lows, with foreign capital outflows and a declining yuan, has heightened pressure on Beijing to take action. However, policymakers are cautious due to concerns about increased debt load and fears of triggering foreign exchange outflows.

On Monday, the central bank is anticipated to keep the benchmark one- and five-year loan prime rates (LPR) unchanged at 3.45% and 4.20%, respectively. The question now is whether this will bring more disappointment to investors or if these expectations are already factored into the currency and stock prices.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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