Asian shares made a muted start to the week, with MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.2% following a broad-based sell-off on Wall Street on Friday. The rise in high Treasury yields has challenged rich Wall Street equity valuations and underpinned the U.S. dollar near multi-month peaks.
The U.S. dollar held near a five-month top on the yen at 157.79, with only the risk of Japanese intervention preventing another test of the 160.00 barrier. The euro has lost more than 5% on the dollar so far in 2024.
China’s main indices were flat, with the blue chip composite index up 0.3% and the Shanghai composite index up 0.2%. South Korea’s main index has been hit by political uncertainty and is down 9% for the year.
Oil prices have had a tougher year, with concerns about demand, particularly from China, keeping a lid on prices and forcing OPEC+ to repeatedly extend a deal to limit supplies. Gold prices, however, have risen 28% for the year to $2,624 an ounce.
The strength of the dollar has been a burden for gold prices, while rising interest rates have tempered corporate earnings growth expectations for 2025, which could influence investment decisions. Bond investors are also wary of burgeoning supply as the U.S. president-elect is expected to release executive orders on tax cuts and other policies, which could further widen interest rate differentials.
