Asian shares opened cautiously on Friday, largely continuing a year-end rally boosted by investor expectations of a rate cut by the US Federal Reserve as early as March.
Hong Kong and Tokyo opened marginally higher in the final trading session of the year, with Japanese shares regaining some ground after missing the glass against the strengthening yen a day earlier.
Currency markets were largely flat on Friday morning, but the US dollar is set to end its worst year since the start of the Covid-19 pandemic, with investors betting on a Fed rate cut and that other countries may keep interest rates higher for longer.
Asian stocks are on track for their best year since the pandemic, but continue to underperform global peers.
Chinese markets, in particular, have been weighed down by concerns about the country’s sluggish economic recovery from long and strict pandemic lockdowns.
Asian stocks open higher on Fed rate hopes
However, there was positive news in the Chinese tech sector on Friday, with Huawei saying it expects 2023 revenue to grow 9% despite facing ongoing US sanctions.
On Thursday, the Dow hit a new record, while the S&P 500 fell just short of an all-time high, despite ending the day with modest gains.
U.S. stocks have rallied since late October as the market has embraced softening inflation and a strong labor market on the belief that the U.S. economy can avoid recession.
Data from the US Labor Department on Thursday showed a slight increase in jobless claims. However, the level remains low by historical standards.
Analysts said they expect year-end market activity to continue to be positive, but in a relatively thin range of trading volumes.
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“Investors seem content to let the market slide sideways into the end of the year, with sellers already done,” investor Louis Navellier said in a note.
Global oil prices have stabilized after concerns over shipping disruptions in the Red Sea eased earlier this week following the formation of a US-led naval coalition to police the route against attacks by Yemen’s Houthi rebels.
U.S. oil prices fell more than 3 percent despite a weekly inventory report that showed lower inventories of crude oil and gasoline.
Gold retreated from its recent early-Friday rally, down 0.9% from the previous day’s high.
Keys around 02:30 GMT
Tokyo – Nikkei 225 (BREAK): DOWN 0.2 percent to 33,470.37
Hong Kong – Hang Seng: DOWN 0.2 percent at 17,006.66
Shanghai – Composite: UP 0.4 percent to 2,967.41
New York – Dow: UP 0.1 percent at 37,710.10 (close)
London – FTSE 100: FLAT at 7,722.74 (close)
Core US inflation rate eases in November as interest rate cut looms
EUR/USD: UP at $1.1074 from $1.1066 on Thursday
Dollar/yen: FLAT at 141.42 yen from 141.41 yen
GBP/USD: UP at $1.2737 from $1.2728
Euro/pound: FLAT at 86.94 pence from 86.92 pence
West Texas Intermediate: UP 0.2 percent to $71.94 a barrel
North Sea Brent crude: UP 0.3 percent at $77.41 a barrel
Source: AFP