Chinese stocks fell on the first trading day of the New Year as weak economic data and the prospect of more US tariffs hurt sentiment.
Benchmarks on the mainland and in Hong Kong retreated after figures showed China’s manufacturing activity slowed its pace of expansion in December. The MSCI Asia Pacific Index dropped the most in almost two weeks, while US equity futures climbed. Japanese markets are closed through Jan. 6 and New Zealand remains on holiday.
“Onshore sentiment seems to be deteriorating on slow PMI and strong DXY,” said Zhaopeng Xing, senior China strategist at ANZ Bank China. “Investors would like to pull back against possible US tariffs.”
The declines come after the S&P 500 and Nasdaq 100 indexes fell for a fourth consecutive session in a year-end drop that shaved more than a trillion dollars from large-cap market values. The yen hovered around 157 per dollar while the rupiah weakened the most in two weeks after Indonesia scaled back a planned increase in the value-added tax rate following a public outcry.
The moves reflect caution in what is the first trading day of the year for many markets around the world as geopolitical tensions simmer and traders begin to execute asset allocation strategies for 2025. China’s growth outlook, the Federal Reserve’s policy path and US President-elect Donald Trump’s agenda are on investors’ radar.
Oil edged higher in the first session of the new year after an industry report signaled US crude stockpiles continued to shrink. Russian gas stopped flowing to Europe via Ukraine, closing off a route that’s operated for five decades. Both sides confirmed the halt Wednesday after a key transit deal expired.
A broad gauge of Treasuries eked out an annual gain in 2024, albeit a smaller one than in 2023. Cash trading in US government bonds is closed in Asia given the holiday in Japan. Gold rose.
Economic readings indicated further resilience in Asia. Singapore’s Prime Minister Lawrence Wong said the country’s economy performed better than expected in 2024. Gross domestic product expanded 4%, Wong said in his New Year’s message. That beat the trade ministry’s November forecast for an expansion of around 3.5%.
In China, the economy is expected to have expanded around 5% for the full year of 2024, President Xi Jinping said. The nation’s sovereign bond yields dropped after the central bank stepped up liquidity support for the economy last month.
Chinese banks stocks declined, led by Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. as the shares traded after adjusting for dividends.
Over in Australia, fresh data showed house prices declined for the first time in 22 months in December as buyers increasingly found themselves priced out of the market, while the supply of properties increased.
Meanwhile, South Korea’s political crisis continued, with Acting President Choi Sang-mok on Wednesday rejecting an attempt by his advisers to resign en masse.
In corporate news over the New Year period, Nippon Steel Corp. offered to give the US government a veto over any reduction in US Steel Corp.’s production capacity in a last-ditch effort to win President Joe Biden’s approval for its takeover of the American company. Shares of US Steel surged by the most in a year.
Alibaba Group Holding Ltd. agreed to sell its shares in Sun Art Retail Group Ltd. to private equity firm DCP Capital, unloading a high-profile physical commerce asset to focus on its core online business. China’s BYD Co. reported a year-end surge to push total sales to 4.25 million passenger cars last year.
Meanwhile, a gruesome attack on revelers celebrating New Year’s in New Orleans thrust US domestic security back into the spotlight less than a month before Trump is sworn in as president.
Stocks, particularly those of US technology companies, outshone virtually every other asset class in 2024. The S&P 500 gained 23%, rising for the fifth time in six years, in an advance that added $10 trillion to US equity values. The MSCI All-Country World Index climbed 16%.
