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Asia mixed as China whipsaws before New Year break: markets wrap

Asia mixed as China whipsaws before New Year break: markets wrap
The Booysendal Northam Platinum Mine’s milling station outside Lydenburg, on 8 November 2023.(Photo: Felix Dlangamandla)

Asian stocks were mixed on Thursday as Chinese mainland equities fluctuated in the final trading day before the New Year holidays. The S&P 500, meanwhile, closed at a fresh high.

Chinese benchmarks wavered in early trade, after the nation replaced the head of its securities regulator on Wednesday, a surprise move that may foreshadow more forceful measures to support the stock market.

China’s consumer prices fell last month at the fastest pace since the global financial crisis as the world’s second-largest economy struggles to shake off persistent deflation pressures. Alibaba Group Holding Ltd. shares fell around 5% despite the company unveiling $25-billion in stock repurchases.

A gauge of the region’s equities advanced for a third day, while benchmarks in Australia and Japan traded within tight ranges. US futures were also little changed after the S&P 500 rose 0.8% on Wednesday, within striking distance of 5,000 index points as traders bet that a solid economy will continue fueling corporate profits. 

Treasuries were mostly calm in Asian trading as the 10-year retraced a minor decline from the prior session. Wednesday was marked by a record $42-billion auction that sold at a lower yield than expected, in a sign of strong demand and easing concerns that the market may struggle to digest heavy supply.

“The market continues to climb the wall of worry, including shifting Fed expectations, geopolitical tension, and overbought market conditions,” said Mark Hackett at Nationwide Funds Group. “We are entering a sluggish seasonal period, but the market has strong momentum.”

In Asia, Japan’s December current account balance was lower than expected. Elsewhere, India’s central bank will hand down its latest monetary policy decision. Markets in Taiwan, Indonesia, Vietnam and Pakistan are closed. Earnings to be released in the region include Honda and SoftBank Group Corp., which is expected to have one of its best quarters in years.

Arm Holdings Plc, in which SoftBank owns a stake, rallied by as much as 38% in after-hours trading in New York after upbeat earnings, while Softbank rose in Asia. US chip stocks within the S&P 500 rose 2.1%, more than the broader market, helped along by a 2.8% gain for Nvidia Corp.

Renewed fears about US regional banks appeared to ease, helping support the tentative risk-on tone in New York trading. New York Community Bancorp shares ended higher after retracing an intraday 14% decline.

More Fed officials suggested on Wednesday they don’t see an urgent case for lowering interest rates, adding to a roster of legislators including chair Jerome Powell who have warned in recent days that a cut isn’t likely until May at the earliest.

In commodity markets, gold retraced a small decline on Wednesday to trade at around $2,037 per ounce. Oil prices rose, with West Texas Intermediate futures climbing early in Asian trading to compound a 0.8% advance.

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