Shares eased in Asia, higher yields test higher rates By Reuters

Written by Wayne Cole

SYDNEY (Reuters) – Asian shares got off to a quiet start to the week on Monday as higher Treasury yields challenged hawkish Wall Street ratings while supporting the U.S. dollar near multi-month highs.

Volumes were light with the New Year holidays approaching and an empty agenda this week. China has its PMI factory survey on Tuesday, while the US ISM survey for December is due on Friday.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, but is still up 16% for the year. decreased by 0.9%, but sits on a gain of about 20% for 2024.

South Korea’s main index was not so lucky, as it faced a storm of political uncertainty in recent weeks, posting a 9% loss for the year. It ended up being 0.3%.

Shares of South Korean carrier Jeju Air hit record lows on Monday, following a plane crash that killed 179 people.

Chinese blue chips added 0.3%, up nearly 16% on the year with almost all of the gains coming in just two weeks in September after Beijing promised more stimulus.

EUROSTOXX 50 futures firmed 0.1%, while being little changed.

and Nasdaq futures were both up 0.1%. Wall Street traded heavily on Friday for no apparent reason, although volumes were only two-thirds of the daily average. (.N)

It’s up 25% for the year and the Nasdaq is up 31%, which boosts ratings compared to the risk-free return of Treasuries. Investors are betting on earnings per share growth of more than 10% in 2025, against an expected increase of 12.47% in 2024, according to LSEG data.

However, the 10-year Treasury yield is near an eight-month high of 4.631% and ended the year around 75 basis points above where it started, even though the Fed provided data 100 to reduce the amount of money charges.

“The continued increase in bond yields, driven by a reassessment of expectations for weak monetary policy, is causing concern,” said Quasar Elizundia, research strategist at broker Pepperstone.

“The possibility that the Fed could maintain monetary policy for longer than expected could temper corporate earnings growth expectations for 2025, which could influence investment decisions.”

Bond investors are also likely to be wary of rising supply as President-elect Donald Trump promises to cut taxes in several proposals to curb the budget deficit.

Trump is expected to release at least 25 executive orders when he takes office on Jan. 20, covering a wide range of issues from immigration to energy and crypto policy.

Widening interest rate differentials have kept the US dollar in demand, giving it a 6.5% gain for the year in a basket of major currencies.

The euro has lost more than 5% against the dollar so far in 2024 to end at $1.0427, not far from its recent two-year high of $1.0344.

The dollar held close to a five-month high in the yen at 157.79, with the only risk of Japanese intervention preventing another test of the 160.00 barrier.

The strength of the dollar has been a burden for gold prices, although the metal is still 28% higher for the year so far at $ 2,624 an ounce. (GOL/)

Oil has had an even tougher year as concerns about demand, particularly from China, capped prices and forced OPEC+ to repeatedly extend the deal to cut supply. (O/R)

It rose 6 cents to $74.23 a barrel, after adding 1 cent to $70.61 a barrel.