Asia’s benchmark stock index rose as equities gained in Japan and South Korea, while several other regional markets remain shut for holidays. Sentiment was boosted after US shares extended this year’s rally on Tuesday.
Japan’s Nikkei 25 Stock Average advanced for a second day, with retail shares rising after a travel pact was agreed with China. Australia and Hong Kong are still closed for the Christmas break. US equities were bolstered Tuesday by a rally in technology share, with the S&P 500 rising more than 1% amid thin trading.
Equity bulls are pinning their hopes on what’s known as the “Santa Claus Rally,” in which stocks rise during the final five trading sessions of a year and the first two of the new one. This time around that window started Tuesday.
“Santa Claus rally could still be alive, with strong seasonality into the end of the year,” said London Stockton, an analyst at Ned Davis Research.
China remains in focus after the central bank held the interest rate on the one-year medium-term lending facility at 2% on Wednesday as economists forecast, keeping its powder dry ahead of possible escalation in trade tensions with the US. The country will expand the investment scope of local government special bonds and increase the proportion of special bonds used as project capital, according to a government statement on Wednesday.
Bank of Japan Governor Kazuo Ueda gave a talk on Wednesday and avoided giving a clear signal that he might raise interest rates next month by reiterating the need to keep monitoring risks for the economy in comments that nudged down the yen.
Japan and China agreed that Beijing’s top diplomat should visit in 2025, adding to signs the two nations are repairing ties that have been strained in recent years. The two countries have also agreed to introduce more measures to promote tourist visits, according to a government statement. Department stores in Japan are leading gains in the Nikkei 225 on the news.
US Treasuries edged lower in Asia, with the benchmark 10-year yield rising one basis point to 4.60%. Bloomberg’s gauge of the dollar was little changed.
Since 1950, the S&P 500 has generated average and median returns of 1.3% during the “Santa Claus” period, widely outpacing the market’s average seven-day gain of 0.3%, according to Adam Turnquist at LPL Financial.
“When investors are on the ‘nice’ list, and Santa delivers a ‘positive’ Santa Claus Rally return, the S&P 500 has generated an average January and forward annual return of 1.4% and 10.4%, respectively,” he said.
“The action of the past few weeks shows that the big-cap tech names are still the key leadership group in today’s stock market,” said Matt Maley at Miller Tabak. “These big-tech names are highly overweighted in the portfolios of a huge number of institutional investors. Any buying they do over the next week is likely to be concentrated in these names.”
The S&P 500 rose 1.1% Tuesday. The Nasdaq 100 added 1.4%. The Dow Jones Industrial Average gained 0.9%.
In commodities, oil ticked up in early Asian trading, with China’s stimulus measures and the outlook for US stockpiles in focus.
Key events this week:
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US initial jobless claims, Thursday
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Boxing Day, Thursday
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Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
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US goods trade, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 9:28 a.m. Tokyo time
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Japan’s Topix rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro fell 0.1% to $1.0396
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The Japanese yen was little changed at 157.20 per dollar
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The offshore yuan was little changed at 7.3042 per dollar
Cryptocurrencies
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Bitcoin rose 1% to $99,427.32
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Ether rose 0.8% to $3,492.78
Bonds
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The yield on 10-year Treasuries was little changed at 4.59%
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Japan’s 10-year yield advanced one basis point to 1.075%
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Australia’s 10-year yield was little changed at 4.44%
Commodities
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West Texas Intermediate crude rose 0.2% to $70.23 a barrel
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Spot gold rose 0.1% to $2,620.04 an ounce
This story was produced with the assistance of Bloomberg Automation.
. Read more on Markets by NDTV Profit.In commodities, oil ticked up in early Asian trading, with China’s stimulus measures and the outlook for US stockpiles in focus. Read MoreMarkets, Bloomberg
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