New year nerves hit Asian stocks ~ EconomyLens.com

Tokyo (AFP) – Asia stocks mostly fell Monday in jittery holiday trade ahead of a potentially tumultuous 2025 when Donald Trump returns to the White House. With volumes thin, US and European equity futures were also pointing lower after losses on Friday that put paid to Wall Street’s usual holiday period “Santa Claus rally”. Tech stocks had led the way, with Elon Musk’s electric car giant Tesla shedding around five percent lower and AI chipmaker Nvidia off around two percent.

Weighing on sentiment were worries about slower-than-hoped US interest rate cuts and possible higher import tariffs once Trump is inaugurated on January 20. “With US (bond) yields climbing and liquidity essentially non-existent, there’s always the potential for outsized moves,” said Stephen Innes at SPI Asset Management. “This comes during a critical phase of year-end rebalancing, intensified by hefty equity positions across portfolios,” Innes said in a note.

Tokyo, on its last day of trading until January 6, fell almost one percent. Nissan slipped as much as 6.7 percent on worries about its mooted merger with fellow Japanese automaker Honda. Overall the Nikkei 225 index gained almost 20 percent in 2024, finally surpassing the high seen before Japan’s asset bubble burst in the 1990s. The yen was little changed after hitting 157.89 against the dollar on Thursday, the lowest in almost six months. That came after Bank of Japan governor Kazuo Ueda failed to give a clear signal on a possible interest rate increase next month.

In Seoul, Jeju Air shares fell as much as 15 percent after one of its planes crashed in South Korea on Sunday, killing 179 people. Another Jeju Air flight had to return after encountering a landing gear problem on Monday, the airline said. Korean authorities ordered an inspection of all Boeing 737-800 aircraft operated by the country’s carriers. South Korea was also hit with further political turmoil, with authorities issuing an arrest warrant for suspended President Yoon Suk Yeol after his declaration of martial law.

Seoul, Hong Kong, Taipei, Sydney, and Manila were all in the red. Shanghai was one of the few gainers, along with Singapore and Kuala Lumpur. China’s purchasing managers’ index (PMI) for manufacturing is due on Tuesday. The reading was expected to stay at 50.3, above the 50 line dividing expansion and contraction, according to Bloomberg.