(Dec 23): Stocks in Asia were primed for a mainly positive open on Tuesday after bullish momentum lifted shares on Wall Street. Oil and gold rallied as the dollar fell.
Equity index futures for Australia, Hong Kong and mainland China rose in early Tuesday trading, while those for Japan edged lower. An index of global stocks rose for a third session on Monday to set a fresh closing record.
The upbeat mood erased December losses for the S&P 500 as the index powered towards an eighth straight month of gains, which would mark the longest winning run since 2018. Tesla Inc and Nvidia Corp led megacaps higher.
“Everything is shaping up for a festive end to the year,” said Mark Hackett at Nationwide. “This week is being driven by technical tailwinds, a bit of stimulus optimism, and self-fulfilling prophecy, all of which are setting up a strong year-end and a solid start to next year.”
The risk-on moves weighed on Treasuries, which sold across the curve on Monday. The two-year yield rose around two basis points, while the 10-year climbed one basis point to around 4.2%.
The dollar fell, while gold and silver struck new highs, with geopolitical tensions in focus. West Texas Intermediate, the US oil benchmark, rose more than 2% on Monday as the US intensified a blockade on Venezuela, with American forces boarding one tanker and pursuing another within weeks of capturing a vessel.
See also: Asian stocks gain as hopes for year-end rally grow
The yen rose on Monday after Japan’s Finance Minister Satsuki Katayama said the country has a “free hand” to take bold action against currency moves that are not in line with fundamentals. The comments were her strongest warning yet to speculators following the yen’s weakening even after a rise in interest rates.
In Asia, data set for release on Tuesday includes inflation for Singapore, machine tool orders for Japan and export orders for Taiwan.
Meanwhile, developer China Vanke Co won last-minute support from creditors to extend a bond grace period in a reprieve that helps it avoid default.
See also: Asian shares advance as US CPI backs rate-cut bets
Santa rally
Despite bouts of volatility and concerns about the AI trade, tech has led the market to the upside this year, and it will probably be the difference between a positive and negative December, said Chris Larkin at E*Trade from Morgan Stanley.
“If a Santa Claus rally does kick in this year, St Nick’s gift bag will likely need to be full of positive tech sentiment,” he noted.
It’s been a strong year for stocks and the big question is whether investors will carry that positive mood into 2026.
Positioning in equities is rising and fund managers are maintaining record low levels of cash. Their expectations of a further rally are outweighing concerns over rich valuations. The US Federal Reserve (Fed) path is also being closely watched, with two rate cuts priced for next year.
Fed governor Stephen Miran told Bloomberg Television the central bank risks sparking a recession unless it continues lowering rates next year.
Uploaded by Isabelle Francis
