Asian markets cautious amid geopolitical tensions: Market wrap-up

(Bloomberg) — Asian stocks opened mixed on Monday as traders grappled with ongoing political unrest in South Korea and investors awaited signs of new stimulus measures from Beijing. Oil will be closely watched after the fall of the Syrian government.

Stock index futures fell in Australia and Hong Kong, while those in Japan and mainland China rose. U.S. stocks rose on Friday, with the S&P 500 notching its 57th all-time closing record, as the monthly jobs report showed the labor market had cooled enough for the Federal Reserve to cut interest rates this month. The U.S. dollar held steady against major currencies in early trading.

Investors are bracing this week for a final set of decisions from central banks across four continents, a key meeting of Chinese officials and U.S. inflation data that could boost returns this year and help guide positioning into 2025. Returns have topped 20% this year, putting them on track for a second straight year of outsized returns, according to data compiled by Bloomberg.

“It’s going to be a dynamic week with incident risk across stores,” Chris Weston, head of research at Pepperstone Group Ltd. in Melbourne, wrote in a note to clients. “The heat on the U.S. Consumer Price Index (CPI) is not necessarily will affect interest rate cuts at next week’s Federal Open Market Committee (FOMC) meeting,” but it could affect the prospects for further easing and drive the dollar.

In Asia, South Korean assets are likely to move as public anger mounts over last week’s brief imposition of martial law, with some lawmakers urging President Yoon Seok-yeol to resign. Opposition lawmakers said they would push for another impeachment vote against Yin after the first impeachment vote failed.

Meanwhile, the People’s Bank of China will parse the yuan’s daily fixing rate after the central bank unleashed support for the yuan through a series of strong fixings last week. Before then, consumer and producer price data were likely to point to weak demand in the world’s second-largest economy and raised expectations for more fiscal support after the Central Economic Work Conference.

“There are legitimate reasons to suggest that China may have been awaiting U.S. trade policy changes starting in January,” Barclays strategists led by Themistoklis Fiotakis wrote in a note to clients. With room for easing, “the pressure on RMB depreciation should also be temporarily relieved, as the People’s Bank of China is at the resistance level of around 7.30.”

Traders will also be keeping a close eye on oil prices after Saudi Arabia cut prices to Asian buyers more than expected after OPEC further delayed increasing production. The move, which is likely to be tempered as markets assess the impact of opposition groups overthrowing the government of Syrian President Bashar Assad, is a major blow to key backers Russia and Iran, which could be a major blow as the conflict persists. will reshape the area.

U.S. Treasuries extended their recent rally on Friday as Donald Trump’s presidential victory raised inflation risks and investors took a breather from a sell-off that peaked in November. Since then, however, yields have been moving lower amid speculation the Fed will ease policy again at this month’s meeting, the last before Trump takes office, as the central bank attempts to guide the economy to a soft landing.

In response to possible tensions between the incoming administration and the U.S. central bank, Trump told NBC’s “Meet the Press” on Sunday that he has no plans to replace Federal Reserve Chairman Jay J. Jerome Powell. Although officials have warned about the pace of further rate cuts, markets now price the probability of a rate cut at the Fed’s December meeting at around 80%.

Economists at Société Générale, including Klaus Bader, wrote in a note to clients that the Fed’s forecasts already suggest a gradual pace of easing monetary policy, “but a slower pace of rate cuts may be needed, Maybe even a pause.” “We expect a 25 basis point rate cut at the December FOMC meeting, but even that will depend on the upcoming consumer price index (CPI).”

Elsewhere this week, Australia’s central bank is likely to keep its key interest rate on hold amid signs the country’s economy is beginning to weaken. The European Central Bank, the Bank of Canada and the Swiss National Bank are all expected to ease policy, while Brazil’s central bank may raise interest rates to curb inflationary pressures.

Some major trends in the market:

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