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Japan Stocks Gain Amid Record Budget Proposal; Asia-Pacific Markets Mixed

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Japan’s Nikkei 225 rose 1.12% to close at 8,220.9 on Thursday, while the Topix index added 1.20%, ending at 2,766.78. The gains followed reports that the Japanese government plans to propose a record ¥107 trillion ($735 billion) budget for the fiscal year starting in April, reflecting increased allocations for social security and debt-servicing expenses, according to a draft reviewed by Reuters.

The Bank of Japan’s Governor Kazuo Ueda also expressed optimism on Wednesday, stating that Japan’s economy is likely to achieve sustainable and stable 2% inflation accompanied by wage growth by 2025. The 10-year Japanese government bond yield edged up 1.3 basis points to 1.078%, while the yen strengthened to 157.16 against the dollar, indicating market anticipation of potential interest rate hikes.

Among Japanese stocks, automakers Nissan and Honda surged 6.58% and 3.84%, respectively, as both companies initiated formal merger talks earlier this week. If successful, the merger would create the world’s third-largest carmaker by sales. Conversely, Japan Airlines slipped 0.24% after a cyberattack caused delays to domestic and international flights, although its systems have since returned to normal.

Elsewhere in the Asia-Pacific region, South Korea’s Kospi dipped 0.44% to 2,429.67, and the Kosdaq fell 0.66% to 675.64. Political tensions intensified as the opposition Democratic Party submitted a bill to impeach acting President Han Duck-soo, with voting expected on Friday. E-Mart shares gained 5.45% following reports that Alibaba Group Holding is nearing a deal to integrate its South Korean business with E-Mart’s e-commerce platform.

China’s CSI 300 posted slight gains, closing at 3,987.48, after the World Bank raised its GDP growth forecast for the country to 4.9% for 2024 and 4.5% for 2025, citing recent policy adjustments. The Chinese government also reaffirmed its commitment to stabilizing the real estate market, announcing measures to control the supply of commercial housing.

Singapore’s manufacturing output grew 8.5% year-on-year in November, driven by robust performance in the electronics sector. However, the figure fell short of Reuters’ 10% growth forecast, and on a month-on-month basis, output contracted by 0.4%, missing expectations for a 0.8% increase.

Markets in Australia, New Zealand, and Hong Kong were closed for the Boxing Day holiday, while U.S. markets were also closed overnight for Christmas. On Christmas Eve, U.S. stocks rallied, with the S&P 500 climbing 1.1% to 6,040.04, the Dow Jones Industrial Average adding 0.91%, and the Nasdaq Composite advancing 1.35%, supported by Tesla’s 7.4% surge.

The rally marked the beginning of the “Santa Claus rally,” a period typically associated with gains during the final trading days of December and the first two in January.

 

Asia-Pacific Markets Mostly Rise as Investors Weigh China Stimulus Measures

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Asia-Pacific markets saw mixed performances on Wednesday, with Hong Kong’s Hang Seng Index extending its gains by 2.2%, driven by investor enthusiasm for China’s newly announced stimulus measures. The Hang Seng rally was supported by strong performances in the energy and basic materials sectors, with the Hang Seng Mainland Properties Index rising 3.6%.

Chinese markets have been reacting positively to the People’s Bank of China’s (PBOC) recent economic support measures. On Tuesday, the Hang Seng Index experienced its best day in seven months, while mainland China’s CSI 300 Index saw its largest one-day gain in over four years. By Wednesday, the CSI 300 continued its upward trend, rising by 1.73%.

The PBOC announced another rate cut, reducing the medium-term lending facility (MLF) rate from 2.3% to 2%. This marked the second rate cut in three months, following a previous reduction from 2.5% to 2.3% in July. In response, the offshore yuan briefly strengthened to 6.995 against the U.S. dollar, breaking the 7.00 level for the first time since May 2023.

Investors are also closely monitoring Australia’s inflation data. The country’s consumer price index rose by 2.7% year-on-year in August, in line with economists’ expectations, and easing from July’s 3.5% increase. Australia’s S&P/ASX 200 Index edged up slightly, recovering from two days of losses.

Elsewhere in the region, Japan’s Nikkei 225 rose 0.32%, while the broader Topix Index gained 0.11%, reversing earlier losses. South Korea’s Kospi was up 0.4%, with the Kosdaq rising 0.43%. South Korea also unveiled its new “Korea Value Up Index,” set to start trading next week. The index will feature 100 companies, with IT and industrial stocks making up over 40%.

In the U.S., markets also had a positive day on Tuesday. The S&P 500 gained 0.25%, closing at a record 5,732.93, while the Dow Jones Industrial Average rose 0.2%, reaching a new high of 42,208.22. The Nasdaq Composite added 0.56%, with Nvidia leading the charge, climbing nearly 4%. This came after a regulatory filing indicated that Nvidia CEO Jensen Huang had concluded his recent stock sales.