Asian stock markets rebounded sharply on Tuesday, led by gains in the tech sector after Wall Street hit record highs overnight.
However, currency markets remained volatile as traders assessed diverging monetary policies in the US and Japan.
Meanwhile, geopolitical tensions, including political uncertainty in France and escalating US-China trade friction, weighed on investor sentiment.
Japan’s Nikkei 225 surged 1.6% by 0200 GMT, bolstered by a rally in tech-heavy stocks, while South Korea’s KOSPI climbed 1.7%.
Taiwanese equities advanced 1.1%, and Australia’s benchmark index rose 0.7%, hitting an all-time high.
Conversely, Chinese markets lagged, with Hong Kong’s Hang Seng index edging lower and mainland blue-chip stocks slipping 0.3%.
Broadly, the MSCI Asia-Pacific index gained 0.7%, mirroring Wall Street’s robust performance.
The S&P 500 and Nasdaq both set new record highs on Monday, driven by gains among the “Magnificent 7” tech giants.
Meta Platforms soared nearly 19% following strong earnings, while Tesla jumped 12%.
In currency markets, the dollar added 0.2% to trade at 149.87 yen, recovering slightly from Monday’s six-week low of 149.09.
A strong US manufacturing report initially supported the greenback, but dovish comments from Federal Reserve Governor Christopher Waller renewed pressure.
Waller indicated a possible rate cut at the Fed’s upcoming December 18 meeting, aligning with market expectations that have risen to a 75% probability of a 0.25% reduction.
The yen found support from speculation that the Bank of Japan might raise interest rates by a quarter-point at its December 19 meeting.
Analysts at IG noted that if USD/JPY remains below the 151–152 resistance range, further declines toward 145.00 are possible, especially if rate hikes materialize in Japan while the Fed cuts rates.
Elsewhere, the euro slipped 0.1% to $1.0488 after falling 0.7% overnight, weighed down by political turmoil in France.
The government faces potential collapse as no-confidence motions against Prime Minister Michel Barnier gain traction.
Sterling was steady at $1.2654, reflecting relative stability amidst broader market uncertainty.
In commodities, gold traded near $2,635 per ounce, struggling to recover from its October peak of $2,790.15.
Oil prices hovered near two-week lows, with Brent crude futures easing 3 cents to $71.80 per barrel and US West Texas Intermediate crude down 5 cents at $68.06.
Adding to the tensions, the Chinese yuan fell to a 13-month low of 7.3145 against the dollar as US-China trade frictions intensified.
President-elect Donald Trump recently demanded that BRICS nations, including China, halt any plans to adopt an alternative global currency, threatening 100% tariffs as a countermeasure.
Global markets remain caught between optimism from robust equity performance and caution over monetary policy shifts and geopolitical uncertainties, leaving investors vigilant as the year-end approaches.
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