By Vivek Kumar
Moving Markets Today: Asian Stocks Track Wall Street Surge; Nikkei Rises Amid BOJ’s Dovish Tone, While China Trails; All Eyes on Netflix and Tesla Earnings
U.S. stocks continued their upward trend for the third consecutive session, building on the momentum that led the S&P 500 to achieve a record high last Friday. In contrast, mainland China’s stock market is trailing behind other Asian markets, despite calls from the premier for increased state support. The decline in oil prices is attributed to economic concerns taking precedence over geopolitical tensions. The Bank of Japan (BOJ) has opted to maintain its ultra-loose policy while revising down its inflation forecast. Investors are eagerly awaiting earnings reports, particularly from Netflix, and expectations are generally positive. General Electric is also scheduled to release its earnings, with JPMorgan anticipating results that surpass Street forecasts. Here are five key takeaways for your day.
Bank of Japan Maintains Ultra-Loose Policy, Trims Inflation Outlook
The Bank of Japan maintained its ultra-low interest rates on Tuesday while awaiting more data on potential wage growth to sustain inflation around the targeted 2%. During the two-day meeting, the BOJ retained the 0.1% interest on excess reserves and kept the 0% target for the 10-year government bond yield, along with a 1.0% upper limit for the 10-year yield, as anticipated. The Bank of Japan revised its forecast for consumer price inflation to 2.4% for the fiscal year ending in March 2025, down from the October projection of 2.8%.
China Mulls $278 Billion Stock Market Rescue Plan: Bloomberg
Chinese authorities are reportedly considering measures to stabilize their falling stock market. According to Bloomberg News sources, policymakers aim to mobilize around 2 trillion yuan ($278.53 billion) from offshore accounts of Chinese state-owned enterprises. These funds would constitute a stabilization fund used to buy domestic shares through the Hong Kong exchange link. Additionally, at least 300 billion yuan from local funds is allocated for investment in onshore shares through entities like China Securities Finance Corp or Central Huijin Investment Ltd, as per the report, Bloomberg reported.
Oil Slides as Economic Worries Trump Geopolitical Tensions; US-UK Launch Strikes on Houthi
Oil prices declined, driven by global demand concerns, despite ongoing geopolitical tensions in the Middle East and worries about supply following an attack on a Russian fuel export terminal. Brent crude futures fell 0.2% to $79.92 per barrel, and U.S. West Texas Intermediate crude futures dropped 0.1% to $74.66 per barrel. The prior day had seen a 2% increase in both contracts due to a Ukrainian drone strike on Novatek’s Ust-Luga terminal. Analysts expect Novatek to resume significant operations at the terminal in the coming weeks.
In a separate development, the U.S. and UK jointly launched air strikes against Houthi targets in Yemen for the second time, marking direct British involvement in military action against the Iran-backed rebel group. The military forces of both nations targeted eight Houthi locations, including an underground storage site and areas used for missiles and air surveillance, according to a joint statement.
What’s Coming Up
This week, economists anticipate that major central banks, such as the European Central Bank and Bank of Canada, will maintain their current interest rates. Key U.S. reports, particularly the fourth-quarter GDP figures, hold significant importance, along with the latest purchasing managers’ index (PMI) reports across G7 nations. Notable U.S. corporations, including Tesla, Intel, Netflix, IBM, Abbott Laboratories, Lockheed Martin, Johnson & Johnson, and Seagate, are expediting their earnings reports.
Japan Stocks Reach 34-Year Highs, China Stocks Lag Despite Premier’s Support Call
The Dow Jones Industrial Average rose by 0.36% to 38,001.81, the S&P 500 gained 0.22% to 4,850.43, and the Nasdaq Composite added 0.32% to 15,360.29. China’s CSI 300 dropped 0.45% despite a call for stronger measures to support its stock market. Hong Kong’s Hang Seng rose by 1.76%, Japan’s Topix by 0.4%, and South Korea’s Kospi by 0.1%. The Nikkei 225 hit a 32-year high at 36,877.41. U.S. Treasury yields remained stable, with the 10-year at 4.1014% and the two-year at 4.3910%. The dollar held at 103.31. Spot gold rose 0.1% to $2,022.89, and Bitcoin traded around $39,950.
