Stock Market Today: Asian Shares Mostly Higher After Wall Street Rally Caps a Dismal Week

Asian shares experienced a mostly positive start on Monday following a strong rally on Wall Street that managed to alleviate some of the losses from a generally disappointing week for U.S. stocks. The benchmark S&P 500 index, despite its 1.1% rise on Friday, closed 2% lower for the week.

In addition to the rise in Asian markets, U.S. futures and oil prices also saw an uptick. Investors received some relief when U.S. lawmakers reached a budget agreement early Saturday, preventing a pre-Christmas government shutdown.

Market Highlights

Tokyo's Nikkei 225 index surged by 0.9% to reach 39,039.18, while the dollar gained slight strength against the Japanese yen, trading at 156.53 yen compared to 156.48 yen earlier. There were rumors circulating about a potential merger between automotive giants Honda Motor Co. and Nissan Motor Corp. which led to speculation. Honda's shares, which fell previously after the news surfaced, rose by 0.8%. Meanwhile, Nissan's stock dipped by 0.9% after initially soaring.

Other major Asian indices also recorded gains. Hong Kong's Hang Seng index rose by 0.7% to 19,857.98, with the Shanghai Composite adding 0.2%. In Australia, the S&P/ASX 500 saw a notable increase of 1.4%, reaching 8,175.80. South Korea's Kospi index increased by 1.5% to 2,440.62, and Taiwan’s Taiex jumped 2.5%. The world's largest semiconductor manufacturer, TSMC, rose by 3.9%, adding to the positive sentiment.

U.S. Market Performance

On the previous Friday, the S&P 500's rally pushed its closing value up to 5,930.85. The Dow Jones Industrial Average climbed by 1.2% to close at 42,840.26, while the Nasdaq composite gained 1% to finish at 19,572.60. Notably, about 90% of the stocks in the S&P 500 had gains.

The rally was largely driven by large technology firms like Nvidia, with investor confidence buoyed by a report indicating a decrease in a key inflation measure favored by the Federal Reserve. This report suggested that inflation, although currently elevated, may not be as high as previously anticipated, providing a glimmer of hope for future economic stability.

Future Outlook

Despite the recent rally, uncertainties linger regarding inflation and whether the Federal Reserve may adjust its approach to interest rates. Fed Chair Jerome Powell recently indicated that fewer rate cuts could be anticipated next year, shocking many traders who had anticipated a more aggressive decrease in rates. The stock market had previously enjoyed significant gains, reaching 57 all-time highs this year amid expectations for continuous rate cuts.

Worries about the market's sustainability have been heightened, particularly given ongoing discussions about the impact of tariffs and trade policies, which could contribute to inflation and affect corporate profitability. Strong performances from major corporations raise questions about whether conditions will remain favorable moving forward.

Commodity and Currency Markets

In other early Monday trading, benchmark U.S. crude oil prices increased by 40 cents, reaching $69.86 per barrel. Meanwhile, Brent crude, the global standard, rose by 36 cents to settle at $73.30. The euro also appreciated, rising to $1.0441 from $1.0433.

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