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Asia-Pacific Markets Gain As Japan Proposes Record Budget

Image: Tokyo, Japan | For Illustration Purposes Only | Jackyenjoyphotography | Moment | Getty Images
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Asia-Pacific stocks were mostly up on Thursday, with several markets remaining closed for the Boxing Day holiday. Investors across the region reacted to a mix of local economic developments and global cues.

Japan Leads Gains Amid Budget Proposal

Japan’s Nikkei 225 climbed 1.12% to close at 8,220.9, while the Topix rose 1.20% to finish at 2,766.78.

  • The gains followed reports that the Japanese government is preparing a record $735 billion budget for the fiscal year starting in April, aimed at covering rising social security and debt-servicing expenses, according to a draft reviewed by Reuters.
  • Bank of Japan Governor Kazuo Ueda projected that Japan’s economy will achieve sustainable and stable 2% inflation by 2025, accompanied by wage increases.
  • The 10-year Japanese government bond yield edged up 1.3 basis points to 1.078%, while the yen strengthened to 157.16 against the dollar, signaling expectations of potential interest rate hikes.

In the corporate sector:

  • Nissan and Honda shares surged 6.58% and 3.84%, respectively, following news that both automakers have entered formal merger negotiations. If successful, the merger would create the world’s third-largest carmaker by sales.
  • Japan Airlines fell 0.24% after a cyberattack disrupted flight schedules. Operations have since returned to normal.

South Korea’s Kospi Dips Amid Political Uncertainty

South Korea’s Kospi fell 0.44% to close at 2,429.67, while the Kosdaq dropped 0.66% to end at 675.64.

  • Political tensions weighed on markets as the opposition Democratic Party submitted a bill to impeach acting President Han Duck-soo, with a vote expected on Friday, Yonhap reported.
  • Shares of E-Mart surged 5.45% following reports of a potential merger with Alibaba Group Holding’s South Korean business, which could bolster Alibaba’s presence in the country’s growing e-commerce market.

China Sees Optimism as Growth Forecasts Improve

China’s CSI 300 edged up slightly, closing at 3,987.48, buoyed by an updated growth forecast from the World Bank.

  • The World Bank raised its 2024 GDP growth projection to 4.9% from 4.8% and 2025 growth to 4.5% from 4.1%, citing recent policy adjustments.
  • Efforts to stabilize the real estate market remain a priority, with the Chinese government announcing plans to optimize the supply of commercial housing to curb market declines.

Singapore’s Manufacturing Growth Falls Short

Singapore reported an 8.5% year-on-year increase in manufacturing output for November, driven by robust electronics sector performance.

  • Despite marking the fifth consecutive month of growth, the figure fell short of the 10% growth forecast by Reuters.
  • On a month-on-month, seasonally adjusted basis, manufacturing output contracted 0.4%, missing expectations of a 0.8% expansion.

Global & U.S. Market Overview

Markets in Australia, New Zealand, and Hong Kong remained closed for Boxing Day.

In the U.S., stock markets were closed for Christmas on Wednesday, but Tuesday saw strong gains as the holiday week began.

  • The S&P 500 rose 1.1% to 6,040.04, while the Dow Jones Industrial Average added 390.08 points (0.91%) to close at 43,297.03.
  • The Nasdaq Composite climbed 1.35% to 20,031.13, driven by a 7.4% jump in Tesla shares.

The gains coincided with the start of the Santa Claus rally, a seasonal trend of market optimism during the last five trading days of December and the first two of January.

Asian markets are navigating a mix of domestic and global developments, with Japan’s budget proposal and China’s growth forecasts adding a positive tone. Meanwhile, U.S. markets are entering the final trading stretch of the year with signs of seasonal strength, positioning global equities for a potentially strong close to 2024.