Asian stocks climb ahead of key rate decisions

Shares in Hong Kong opened lower while those in mainland China fluctuated, showing weak market momentum after soft retail sales data Monday

Asian equities tracked gains on Wall Street as traders awaited a raft of interest-rate decisions by central banks this week, including the Federal Reserve.

A key stock benchmark for the region climbed, as did shares in Australia and Japan. Shares in Hong Kong opened lower while those in mainland China fluctuated, showing weak market momentum after soft retail sales data Monday. The moves came after a positive session on Wall Street, where the Nasdaq 100 gained more than 1% to reach another record high.

All eyes will be on a multitude of central bank policy decisions slated for this week, including the US and Japan. Sentiment in the US is relatively positive, with a widely expected quarter-point rate cut from the Fed on Wednesday seen as adding fresh support and extending gains in stocks. The yen weakened beyond the 154 level versus the dollar overnight.

“This week will probably be the final active week for the year,” said Wong Kok Hoong, head of institutional equities sales trading at Maybank Securities. “A rate cut is pretty much all priced in for the Fed, and it is also all but sure the Bank of Japan will maintain status quo. So we will expect stocks in the US and Japan to be well supported ahead of these key decisions.”

The yen steadied after six days of losses, as traders awaited this week’s Bank of Japan policy decision. Traders are pricing in a less than 20% chance of a rate hike in December, according to swaps market pricing.

The Bloomberg’s dollar index was largely unchanged Tuesday. The 10-year Treasury yield was flat at 4.40%.

Australia’s consumer confidence declined in December as persistent inflation and elevated interest rates at home coupled with upheaval abroad increased household uncertainty over the outlook for the economy.

In the US, traders will be parsing fresh economic data. On Monday, data showed that activity at US service providers is expanding at the fastest pace since October 2021. Meanwhile, a measure of New York state factory activity retreated by the most since last May.

The main focus remains Wednesday’s Fed decision, which will be followed by policy announcements in Japan, the Nordics and the UK this week. Even if we get a “hawkish cut” from the Fed, it would be because the central bank sees underlying strength in the economy, and that means the rally in US stocks could continue to broaden out, Tony DeSpirito, BlackRock’s global chief investment officer of fundamental equities, said on Bloomberg TV.

In the corporate world, President-elect Donald Trump announced that SoftBank Group Corp. planned to invest $100 billion in the US over the next four years during an event alongside Chief Executive Officer Masayoshi Son on Monday. Shares of SoftBank rose as much as 4%.

Bitcoin rose to a record high on Trump’s support for digital assets and optimism about the upcoming inclusion of MicroStrategy Inc., an accumulator of the token, in a key US stock gauge.

Oil steadied after a decline, after poor economic data from China reinforced concerns about weakening demand in the world’s biggest crude importer. Gold was little changed, holding on to a slight gain in its previous session.