Asian shares rise as Wall Street awaits data: Market wrap-up

(Bloomberg) — Asian stocks are set to follow Wall Street’s positive lead, as a rebound in the world’s largest technology companies propelled stocks to record highs.

Futures showed benchmarks in Tokyo, Shanghai and Sydney would open higher at the open, while Hong Kong’s benchmark was flat. Currency markets were in focus, with the dollar snapping a three-day losing streak after President-elect Donald Trump issued a warning to BRICS nations. French bonds and stocks came under pressure again, while the euro fell 1.1% on political unrest in the country.

In the United States, the S&P 500 posted its 54th record close this year with a “modest” gain, with only a few stocks closing higher. The tech-heavy Nasdaq 100 rose more than 1%, with Tesla Inc. leading large-cap gains and Apple Inc. hitting a new high.

Traders are awaiting a slew of economic data and comments from a Federal Reserve spokesman that will help shape the outlook for interest rates. U.S. Treasuries pared losses on Monday after Federal Reserve Governor Christopher Waller said he was leaning toward voting for a December rate cut, with swaps priced at more than 70% above 25 basis points this month.

The highlight of the week is Friday’s nonfarm payrolls report, which is expected to show U.S. payrolls rose sharply in November after hurricanes and mass strikes a month ago dented job gains. Federal Reserve Chairman Jerome Powell participated in a moderated discussion on Wednesday as investors awaited any assessment of the job market and inflation, as well as clues on whether the central bank will cut interest rates in December.

“This week is the last truly important week of economic data in 2024,” said Tom Essaye of The Sevens Report. “If the outcome is ‘Goldilocks’, then investors will expect a soft landing and a rate cut in December.”

The S&P 500 rose 0.2%. The Nasdaq 100 rose 1.1%. The Dow Jones Industrial Average fell 0.3%. The 10-year Treasury yield rose two basis points to 4.19%.

The United States has imposed new restrictions on China’s access to chips and key components for artificial intelligence, escalating efforts to curb Beijing’s technological ambitions but not abandoning previous proposals to sanction more major Chinese companies.

The U.S. Commerce Department has imposed new restrictions on the sale of high-bandwidth memory chips produced by U.S. and foreign companies, which could affect South Korea’s SK Hynix Corp and Samsung Electronics Co as well as Idaho-based Micron Technology Co.

In China, investors eager for signs of stimulus to boost a subpar economy were nervous as the Communist Party’s elite decision-making body failed to release news of a regular November meeting. Investors are now turning their attention to this month’s Politburo meeting, one of three annual meetings that typically focus on economic policy.

In Europe, Marine Le Pen pledged to bring down Prime Minister Michel Barnier’s government after he failed to meet her demands for a new budget, threatening France’s finances and politics confusion.

Back on Wall Street, the mood remains lively. Fed Waller said he is inclined to vote for another rate cut when officials meet later this month, although data released before then may warrant keeping rates steady.

The optimism is in stark contrast to a year ago, when stock investors and strategists were bracing for a potentially tumultuous 2024, worried about the risk of a hard landing for the U.S. economy and interest rate cuts that might be too late to prevent. Few expected the S&P 500’s annual gains to rank among the best in history.

“We now find ourselves in the middle of this ‘Goldilocks’ zone, with economic health supporting earnings growth while remaining weak enough to justify a potential Fed rate cut,” said Nationwide’s Mark Hackett. “December. “Other technical drivers of continued seasonal tailwinds that historically underperform the market include financial conditions, sentiment, momentum and breadth.”

Bespoke Investment Group said December is typically a stronger month for markets, entering into a month of steady gains year-to-date.

Bespoke noted that in the 22 years in which the S&P 500 has gained more than 20% in the year to November, the index has averaged a gain of 1.77% in December, with positive returns 77.3% of the time. Although the index was up more than 20% through November, only five of the 22 declines in December occurred, but three of the five declines in December occurred in election years (1936, 1980, 1996).

Some major trends in the market:

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