Strong US growth data drives record highs in New York, but regional stocks falter as investors weigh rate outlook and geopolitical risks
Asian equity markets headed into the Christmas break on a mixed footing on Wednesday, as investors struggled to draw clear direction from a record-setting session on Wall Street powered by stronger-than-expected US economic data.
Regional markets opened mostly higher but lost momentum toward the close, with several indices slipping into negative territory. Meanwhile, safe-haven demand pushed gold above $4,500 an ounce for the first time, as geopolitical tensions involving the United States and Venezuela added to market uncertainty.
Overnight in New York, optimism dominated trading after data showed the US economy expanded at an annualised 4.3 percent in the third quarter, its fastest pace in two years and well above forecasts. The figures, underpinned by resilient consumer demand and business investment, lifted the S&P 500 to a fresh all-time high.
The growth report helped ease concerns triggered by a recent run of weak labour market data, which had raised questions about the strength of the world’s largest economy.
Mixed signals temper rate-cut expectations
However, other indicators painted a more cautious picture. A key measure of consumer spending declined for a fifth consecutive month, falling to its lowest level since February 2021, as households remained concerned about job security. Earlier data had shown US unemployment rising to a four-year high.
With economic growth proving stronger than anticipated, investors scaled back expectations of another Federal Reserve interest rate cut next month. While hopes of lower borrowing costs have fuelled the recent rally in global equities, analysts noted that the robust GDP data outweighed disappointment over a possible pause in easing.
“We’re set up for a Santa Claus rally,” said Kieran Calder of UBP, speaking to Bloomberg TV. “The market is taking some of the data pretty positively.”
Asia closes mixed as traders wind down for holidays
Asian markets swung between gains and losses as trading volumes thinned ahead of the Christmas holiday.
Tokyo erased early gains to close slightly lower, while losses were also recorded in Sydney, Singapore, Seoul, Bangkok and Jakarta. In contrast, Hong Kong ended the session higher, alongside gains in Shanghai, Wellington, Taipei and Mumbai.
Gold and silver surge on geopolitical tension
Gold surged to a record high of $4,525.77 per ounce, while silver climbed to $72.70 an ounce, supported by rising geopolitical risks and expectations that the Federal Reserve will continue easing policy next year.
Investor anxiety has increased as Washington intensifies pressure on Caracas, including a blockade targeting sanctioned oil vessels linked to Venezuela. Earlier this week, US President Donald Trump said Venezuelan leader Nicolas Maduro would be “smart” to step aside, as the United States ramps up military operations and rhetoric in the region.
Asian currencies rebound amid policy signals
In currency markets, the Japanese yen extended its recent rebound against the dollar after Finance Minister Satsuki Katayama signalled that authorities were prepared to intervene to counter speculative moves weakening the currency.
South Korea’s won also strengthened after the country’s central bank and finance ministry confirmed discussions on stabilising the currency, warning against excessive volatility. The government also announced plans to introduce tax measures aimed at boosting foreign investment.
The won had recently come under pressure due to capital outflows and concerns that planned US investments under ongoing trade talks could accelerate the exit of funds. It was trading around 1,457 to the dollar on Wednesday, after nearing 1,500, a level last seen during the 2009 global financial crisis.
Market snapshot
- Tokyo – Nikkei 225: Down 0.1% at 50,344.10
- Hong Kong – Hang Seng: Up 0.2% at 25,818.93
- Shanghai – Composite: Up 0.5% at 3,940.95
Currencies:
- Dollar/Yen: 155.70
- Euro/Dollar: $1.1800
- Pound/Dollar: $1.3522
Commodities:
- WTI crude: Up 0.3% at $58.57
- Brent crude: Up 0.3% at $62.55
Global markets:
- Dow Jones: Up 0.2% at 48,442.41
- FTSE 100: Up 0.2% at 9,889.22
About the Author
