Asian markets experienced a mix of gains and losses on Monday as investors assessed their positions following the previous week’s rally, which was driven by the Federal Reserve’s decision to cut interest rates. The Tokyo market led the gainers after the Bank of Japan announced that it would gradually sell off its substantial holdings of exchange-traded funds (ETFs), which had been purchased as part of a monetary easing campaign aimed at stimulating the country’s sluggish economy.
The sell-off on Friday was triggered by the Bank of Japan’s initial announcement that it planned to offload its ETF holdings, causing the Nikkei to decline sharply. However, on Monday, officials clarified that the sales would be conducted at a steady pace, which is expected to take around 100 years to complete, thereby alleviating concerns and prompting a rebound in the market.
In other developments, investors drew encouragement from the talks between US President Donald Trump and Chinese leader Xi Jinping on Friday, which the US president described as having “made progress on many very important issues.” The discussions included a potential deal for the sale of the popular social media app TikTok. Additionally, Trump announced that he would meet with Xi on the sidelines of an Asia-Pacific Economic Cooperation summit in South Korea next month and planned to visit China in the following year.
According to Ray Attrill of the National Australia Bank, while the talks may have lacked substance, they appear to have contributed to a positive atmosphere, potentially paving the way for an extension of the ongoing US-China detente. The recent rally in equities has been fueled by optimism that the US central bank will lower borrowing costs, as concerns about a softening labor market outweigh stubbornly high inflation.
The Tokyo market was the standout performer on Monday, rising by over 1% after the Bank of Japan’s clarification on its ETF sales. Other markets, including Shanghai, Sydney, Seoul, Singapore, and Taipei, also recorded gains, while Hong Kong, Wellington, Manila, and Jakarta experienced declines. The mixed performance followed another record-breaking day on Wall Street.
Key figures at around 0230 GMT included the Tokyo Nikkei 225, which was up 1.5% at 45,729.33, and the Hong Kong Hang Seng Index, which was down 0.8% at 26,344.78. The Shanghai Composite rose by 0.1% to 3,822.08, while the euro/dollar exchange rate declined to $1.1729 from $1.1745 on Friday. The dollar/yen exchange rate increased to 148.33 yen from 147.90 yen, and the price of West Texas Intermediate crude oil rose by 0.5% to $63.02 per barrel.
The fluctuations in Asian markets reflect the ongoing uncertainty and cautiousness among investors, who are carefully monitoring developments and adjusting their positions accordingly. As the global economic landscape continues to evolve, investors will be watching closely for signs of stability and growth, particularly in the wake of the US Federal Reserve’s interest rate cut and the ongoing US-China trade negotiations.
