Investor sentiment remains slightly positive ahead of year-end, though momentum is low due to the holiday mood. MSCI Inc.'s emerging-market equity index rose 0.6% in Asian trading, hitting its highest level since November 14. South Korea and Taiwan led gains, boosted by tech stocks like Samsung Electronics, which reached an all-time high. Markets in Indonesia and Hong Kong were closed for holidays.
Tokyo inflation slowed more than expected in December but stayed above the Bank of Japan’s (BoJ) 2% target. Core consumer prices in Tokyo rose 2.3% year-on-year (y/y), down from 2.8% in November. Despite easing, inflation remains above target, supporting expectations for gradual rate hikes. Analysts expect rates to rise every six months, potentially reaching around 1.25% if wage growth remains strong.
BoJ Governor Kazuo Ueda said inflation is steadily approaching the 2% target, with tight labor markets pushing wages higher. He highlighted Japan’s aging population as a key driver of labor shortages. Ueda added that companies are passing on higher labor and material costs, signaling a positive cycle of rising wages and prices, which the BoJ has long sought.
On Wednesday, tech stocks like Nvidia (down 0.64%) and Oracle (down 0.38%) declined, while Tesla (up 0.76%) and consumer defensive stocks like Walmart (up 0.25%) and Costco (up 0.67%) rose. Market sentiment was mixed, with tech stocks showing vulnerability despite generally positive economic signals. Investors may want to diversify, as consumer cyclical and defensive stocks seem safer right now. Tesla's performance points to potential in the auto sector, while tech stocks require caution.
Elsewhere, the holiday mood stalled developments on issues like the Ukraine-Russia peace deal, U.S.-Venezuela tensions, and the Iran-Israel conflict. U.S. President Donald Trump is expected to announce his Fed Chair choice in early January, but no major trade news has emerged. As markets in Asia-Pacific open post-Christmas, U.S. markets will be open, while some in the UK and Europe will remain closed, suggesting no significant moves ahead.
The U.S. Dollar Index (DXY) hovers around 98.00, facing both a second monthly and significant yearly loss, which is lifting Gold prices, although there’s little momentum. EURUSD and GBPUSD struggle to maintain gains from multi-month highs, while AUDUSD edges higher. NZDUSD retreats, and USDCAD posts a corrective bounce from a multi-month low. Meanwhile, USDJPY edges higher, stalling three-day losing streak. Bitcoin (BTC) rises, while Ethereum (ETH) drifts lower, as Asia-Pacific shares see mild gains, following Wall Street's positive performance on Wednesday.
Despite sluggish markets, Gold reached an all-time high near $4,540 before pulling back to $4,510. The yellow metal is up over 70% year-to-date, marking its best performance since 1979. Key factors driving this surge include a weaker U.S. Dollar, strong global ETF demand, and uncertainty in markets, which have boosted Gold as a safe-haven investment in 2025.
EURUSD and GBPUSD remain flat after reversing from multi-month highs on Wednesday. The lack of movement could be due to holidays in the UK and European markets, although U.S. markets will be open after the Christmas break. Still, a dovish Fed bias keeps buyers hopeful for both pairs, despite the recent pause in action.
Meanwhile, USDJPY didn’t react strongly to the BoJ’s rate hike, posting only a mild yearly gain. Today’s weaker data from Japan and mixed comments from BoJ Governor Ueda led to the Yen pair’s first daily gain in four days, though overall market momentum remains weak.
AUDUSD showed mild gains, while NZDUSD faced slight losses, and USDCAD bounced off a five-month low in a sluggish market. WTI crude oil’s positive weekly performance, despite today’s lack of movement, has pressured USDCAD due to oil being a key export for Canada. Additionally, the hawkish Bank of Canada (BoC) bias and Canada’s strong trade ties globally may be benefiting USDCAD bears. Meanwhile, mixed views on the Reserve Bank of Australia (RBA) and Reserve Bank of New Zealand (RBNZ) are creating uncertainty for AUDUSD and NZDUSD buyers, even though a softer USD and hopes for China’s stimulus are supporting these currencies.
With major markets on holiday and a lack of key catalysts, WTI crude oil and cryptocurrencies have remained mostly flat. Meanwhile, Asia-Pacific shares have followed mild gains, reflecting Wall Street’s slightly upbeat performance. The dovish Fed bias and recent positive data from major economies have likely supported market sentiment in recent days.
With holidays in Europe and the UK, and a light economic calendar in the West, Friday is expected to be slow as the year-end holiday season continues. Most global markets are in holiday mode, and with no major data or events, financial traders might see an inactive day. This could allow the U.S. Dollar to maintain its mild softness, giving risk assets a chance to edge higher. As a result, cryptocurrencies and equities could see slight gains, Gold may stay firm, and Crude Oil might post modest gains as well.
May the trading luck be with you!
