Asia report: Another US rally fails to spark regional markets

12th Nov 2024 08:48

(Sharecast News) - Asia-Pacific markets experienced widespread declines on Tuesday, as investor caution lingered despite a strong rally in US stocks, where key benchmarks closed at record highs following last week's election results.

Traders in the region were also assessing fresh survey data on business and consumer conditions in Australia.

"Asian stocks declined while the dollar remained at four-month highs on Tuesday, but the focus was on bitcoin, which reached a record high driven by investor bets on assets expected to benefit from Donald Trump's election win," said Patrick Munnelly at TickMill.

"Investors anticipate Trump's second term will bring tax cuts and looser regulations, boosting the world's largest cryptocurrency, bitcoin, to an all-time high of $89,657.

"However, the threat of potential tariffs from the new White House administration has put pressure on the euro, which touched near seven-month lows overnight."

Munnelly said the dollar was expected to benefit from policies that would likely keep US interest rates relatively higher for longer.

"The Republican Party's decisive win removes the uncertainty of a contested US election outcome, but the medium-term outlook could become more complex if Trump pursues aggressive tariff hikes, which could fuel inflation and impact the Federal Reserve's rate-cutting plans.

"Asian stocks, including Taiwan and South Korean shares, declined, with chip stocks in the region also reeling after the U.S. ordered Taiwan Semiconductor Manufacturing Company to stop supplying certain chips to China.

"In the commodities market, oil prices have declined as China's stimulus plan and concerns over oversupply have dampened market sentiment in recent sessions."

Most markets finish red despite Wall Street's overnight gains

In Japan, the Nikkei 225 dipped by 0.4% to 39,376.09, with notable losses from DOWA Holdings, which fell 8.67%, DeNA Co with a 6.65% drop, and Dainippon Screen Manufacturing, down by 4.62%.

The broader Topix index managed a modest gain of 0.07%, closing at 2,741.52.

China's markets also struggled, with the Shanghai Composite dropping 1.39% to 3,421.97 and the Shenzhen Component down by 0.65% to 11,314.46.

Major losers in Shanghai included Ningbo Yongxin Optics, which plunged 10%, followed closely by Jiangxi Lianchuang Opto-electronic Science & Technology and Lifan Industry Group, each declining nearly 10%.

Hong Kong's Hang Seng Index saw a sharp fall of 2.84% to 19,846.88, driven by steep losses in prominent stocks such as Zhongsheng Group, down 9.61%, China Hongqiao Group with an 8.7% decline, and SMIC, which dropped by 7.97%.

South Korea's Kospi 100 also fell by 2.14% to 2,466.30, impacted by losses from Hanmi Pharm, down 7.67%, Krafton with a 6.93% dip, and Hyundai Steel, which decreased by 6%.

Australia's S&P/ASX 200 posted a minor decline of 0.13% to 8,255.60, with Paladin Energy experiencing a significant 28.93% drop, and smaller declines seen in Bellevue Gold and Vault Minerals.

In contrast, New Zealand's S&P/NZX 50 managed to gain 0.5% to close at 12,749.36, as stocks like Kiwi Property Group, ANZ Group, and KMD Brands posted gains.

In currency markets, the dollar was last up 0.23% on the yen to trade at JPY 154.07, as it added 0.58% against the dollar to AUD 1.5297, and advanced 0.38% on the Kiwi, changing hands at NZD 1.6831.

Oil prices saw slight gains, with Brent crude futures last up 0.53% on ICE at $72.21 per barrel, and the NYMEX quote for West Texas Intermediate up 0.57% to $68.43.

Business and consumer sentiment on the rise down under

In economic news, Australia's consumer and business confidence levels looked to be on the rise, indicating growing optimism about the country's economic outlook.

The Westpac-Melbourne Institute index showed a 5.3% increase in consumer sentiment for November, building on a 6.2% gain in October.

On the business side, confidence reached its highest level since early 2023.

The business confidence index, as reported by LSEG, moved from -2 in September to +5 in October, while overall business conditions remained stable at +7.

Reporting by Josh White for Sharecast.com.