Summary:
During Christmas, Asian stocks traded flat; many markets closed. US stocks ended mixed on Friday due to lower-than-expected inflation.
Asian stocks traded sideways on Tuesday with most markets were closed during the Christmas holiday. US stocks gyrated to a mixed close on Friday on a lower-than-expected inflation print.
Japan's Nikkei 225 opened flat to digest its remarkable yearly gain. The Fed has opened the door to interest rate cuts, a major tailwind for EM assets that were hit by selloff.
The index touched its 33-year high last month. One of the world’s biggest share market rallies this year in Japan may be extended if foreign investors become even more bullish in 2024.
Japanese stocks may stay solid given that the yen remains relatively cheap following a 1.5-month rally and corporate earnings have become less susceptible to foreign exchange fluctuations.
But foreign investors were net sellers for only three months this year as of November – a sign of profit-taking, according to data calculated by the Tokyo Stock Exchange. The economic data is also worrying.
Japan's GDP fell 2.9% year-on-year in the three months through September, the deepest contraction since the second quarter of 2020 due to lackluster private consumption and slowing corporate investment.
Nikkei 225 has not made further headway in H2 and got stuck in a range above 30,000. Another test of the 33,900/34,000 zone could be in play with strong support at the 50 SMA.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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