(Bloomberg) — Most Asian shares rose, led by tech firms as new US curbs on Chinese access to vital components for chips and AI proved to be less punitive than feared.
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Equity benchmarks increased in Japan, South Korea and Australia. Hong Kong and mainland Chinese stocks bucked the trend, after the yuan fell to a one-year low against the dollar on concerns about a weak economy and heightened tensions with the US.
US futures were flat after the S&P 500 notched its 54th closing record this year on Monday, and the tech-heavy Nasdaq 100 rose more than 1%.
The generally positive tone for Asian equities came as investors breathed a sigh of relief that the Biden administration’s fresh restrictions on tech exports to China fell short of earlier proposals that would have sanctioned more key Chinese firms. That said, sentiment remains fragile toward the world’s No. 2 economy, amid disappointment with Chinese leaders’ decision to skip releasing a key meeting’s readout that many had hoped for receiving new policy signals from.
“US foreign policy, the latest Commerce Department chip curbs weren’t as harsh as many feared, which is also boosting related shares in East Asia,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors.
The dollar edged higher in Asian trade. It snapped a three-day losing streak Monday after President-elect Donald Trump’s warning to BRICS nations. The euro was little changed after falling as much as 1.1% in the previous session amid the political turmoil in France, where bonds and stocks came under renewed pressure.
More broadly, traders are bracing for a barrage of economic data and remarks from Federal Reserve speakers that will help shape the outlook for interest rates. The highlights this week include Friday’s payrolls report, which is expected to show US hiring jumped in November, as well as Federal Reserve Chair Jerome Powell’s scheduled participation in a moderated discussion on Wednesday.
“This week is the last truly important economic data week of 2024,” said Tom Essaye at The Sevens Report. “If results are ‘Goldilocks,’ then investors will expect a soft landing and a December rate cut.”
Treasuries were steady in Asia, after paring losses Monday following Fed Governor Christopher Waller’s assessment that he’s inclined to vote for a rate cut in December, though data due before then could make the case for holding them steady. The swaps market is predicting more than 70% of a quarter-point interest rate cut this month.