US futures in tight range after Asian shares gain: Markets wrap

By Pune Media On Dec 26, 2024 23

(Bloomberg) — US stock futures traded in a narrow range after most Asian shares advanced amid optimism the year-end will once again prove a strong season for equities. Treasuries fell as demand for haven assets waned.

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The MSCI Asia Pacific Index climbed for a fourth day, the longest winning streak since September, led by Japan and Taiwan. Japanese shares also rose after central bank governor Kazuo Ueda on Wednesday avoided giving any clues about a possible interest-rate hike. Most major markets in Europe will stay shut for the Christmas break Thursday, while trading will reopen in the US.

Equity bulls are pinning their hopes on what’s known as the “Santa Claus Rally” in which stocks rise during the final five trading sessions of a year and the first two of the new one. This time around that window started Tuesday.

“A follow-through from pre-Christmas momentum will mean a continued drift higher for Asian markets,” said Jun Rong Yeap, a market strategist at IG Asia Pte in Singapore. “Weakness in the yen on the back of recent Fed-BOJ policy divergence has offered some support for Japanese equities in today’s session, coupled with the year-end positive seasonality around the Santa Claus rally.”

Japanese retail shares gained after the country agreed with China to introduce more measures to promote tourist visits. The two nations also agreed that Beijing’s top diplomat should visit Japan in 2025, adding to signs the two nations are repairing ties that have been strained in recent years.

Department store operator J. Front Retailing Co., which also got a boost from better-than-expected earnings, jumped as much as 9% in Tokyo, while Isetan Mitsukoshi Holdings Ltd. and Takashimaya Co. also climbed.

Toyota Motor Corp. was the largest contributor to gains in the MSCI Asia Pacific Index, following a report the automaker is planning to double its target for return-on-equity.

Bank of Japan Governor Ueda on Wednesday avoided giving a clear signal he might raise rates next month by reiterating the need to keep monitoring risks for the economy in comments that nudged down the yen.

Shares of Chinese computing-equipment makers advanced after the nation said it planned to include the sector into the investment scope of local government special bonds. Kingsignal Technology Co. surged as much as 20% as did Broadex Technologies Co.

Treasury 10-year yields climbed two basis points to 4.61% before the US auctions $44 billion of seven-year notes on Thursday. The dollar was mixed against its Group-of-10 peers.

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Since 1950, the S&P 500 (^GSPC) has generated average and median returns of 1.3% during the “Santa Claus” period, widely outpacing the market’s average seven-day gain of 0.3%, according to Adam Turnquist at LPL Financial.

“When investors are on the ‘nice’ list, and Santa delivers a ‘positive’ Santa Claus Rally return, the S&P 500 has generated an average January and forward annual return of 1.4% and 10.4%, respectively,” he said.

The S&P 500 closed 1.1% higher on Tuesday, extending this year’s advance to 27%. The Nasdaq 100 added 1.4%, while the Dow Jones Industrial Average gained 0.9%.

“The action of the past few weeks shows that the big-cap tech names are still the key leadership group,” said Matt Maley at Miller Tabak. “These big-tech names are highly overweighted in the portfolios of a huge number of institutional investors. Any buying they do over the next week is likely to be concentrated in these names.”

In commodities, oil held gains after an advance on Tuesday, with China’s stimulus measures and the outlook for US stockpiles in focus.

Key events this week:

US initial jobless claims, Thursday
Boxing Day, Thursday
Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
US goods trade, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 8:12 a.m. London time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index fell 0.1%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0397
The Japanese yen was little changed at 157.37 per dollar
The offshore yuan was little changed at 7.3090 per dollar
The British pound fell 0.2% to $1.2530

Cryptocurrencies

Bitcoin fell 1.7% to $96,712.76
Ether fell 2% to $3,396.22

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.61%
Germany’s 10-year yield was unchanged at 2.32%
Britain’s 10-year yield was unchanged at 4.58%

Commodities

Brent crude rose 0.3% to $73.79 a barrel
Spot gold rose 0.4% to $2,628.16 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Rita Nazareth and Winnie Hsu.