Japan’s finance minister welcomed the New Year as Tokyo’s market reopened following the lengthy traditional holiday, with staff in suits and kimonos celebrating for a prosperous 2025.
“The Japanese government will take steps to ensure economic growth through wage hikes and investments,” said finance minister Katsunobu Kato, promising to “identify signs of recovery” and make sure that “every citizen feels the boost in their paychecks.”
There's a cautious vibe across much of Asia due to potential shifts from President-elect Donald Trump, who plans to significantly increase tariffs on imports from China and other nations, which could impact growth in a region that heavily depends on trade.
Nippon Steel is likely to file a lawsuit after U.S. President Joe Biden turned down its nearly $15 billion offer to buy Pittsburgh-based U.S. Steel Corp. Nippon Steel’s shares dropped 0.7% in Tokyo on Monday, while U.S. Steel’s shares fell 6.5% on Friday.
In Tokyo, the Nikkei 225 index fell 1.6% to 39,258.25, and Hong Kong's Hang Seng dropped 0.5% to 19,654.82.
The Shanghai Composite index also slipped 0.5% to 3,194.20.
Markets seemed unfazed by a report showing that China’s services sector grew at its fastest rate in seven months in December, even as export businesses struggled, according to a private sector survey. The index climbed to 52.2 in December, exceeding the 50 mark that indicates growth.
On a brighter note, other parts of Asia saw some gains. Australia’s S&P/ASX 200 edged up 0.1% to 8,257.40, and Taiwan's Taiex surged 2.8%.
In South Korea, the Kospi rose 1.8% to 2,485.31, boosted by a 9% jump in shares of computer chip maker SK Hynix Inc. and a 2.9% increase in shares of Samsung Electronics, the country’s largest company.
South Korea's anti-corruption agency has requested that the police assume responsibility for detaining impeached President Yoon Suk Yeol, following the agency's unsuccessful attempt to take him into custody during a standoff with the presidential security service last week.
On Friday, the S&P 500 experienced a rally of 1.3%, closing at 5,942.47. This marked its first gain since Christmas and its best performance in nearly two months. The resurgence was largely driven by strong performance from Big Tech stocks, which helped the index break a five-day losing streak, its longest since April, and reduced its weekly loss to 0.5%.
The Dow Jones Industrial Average increased by 0.8%, reaching 42,732.13, while the Nasdaq composite surged by 1.8% to 19,621.68.
U.S. stock indexes have reached record highs as the economy continues to grow, despite elevated interest rates that have nearly brought inflation down to the Federal Reserve's 2% target.
However, despite the solid outlook for the economy and job market, uncertainty looms ahead. The S&P 500 achieved over 50 all-time highs last year, largely due to expectations that the Fed would continue to lower interest rates through 2025, following its initial cuts in September.
Traders are now tempering their expectations for future rate cuts. Inflation remains persistent as the Fed seeks to achieve the final percentage point reduction to reach the 2% target. Concerns are also mounting that tariffs and other policies from President-elect Donald Trump could exert upward pressure on inflation. Meanwhile, critics argue that U.S. stock valuations appear excessively high, having outpaced corporate profit growth significantly.
In other market activity, U.S. benchmark crude oil fell by 29 cents to $73.67 per barrel, while Brent crude, the international benchmark, decreased by 33 cents to $76.18 per barrel.
The U.S. dollar strengthened against the Japanese yen, rising to 157.73 from 157.22. The euro was priced at $1.0309, up slightly from $1.0306.