(Bloomberg) — Asian stocks are poised for cautious gains after US shares rose on Friday and as global markets enter a seasonally strong period. Developing nation assets will be in focus after further tariff threats from US President-elect Donald Trump.
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Equity futures in Australia, Hong Kong and mainland China point to early gains when markets resume trading on Monday, while contracts in Japan were steady. US stocks rose 0.6% on Friday to cap their best month this year. The dollar was steady against major currencies in early trading Monday, while Australia’s 10-year yield slipped.
The dollar has weakened each December for the past five years, while global stocks have strengthened an average 2.5%, data compiled by Bloomberg show. That trend may take time to play out this month amid focus on data including European economic activity and US jobs ahead of meetings from eight of the 10 major central banks, with traders split on their likely outcomes, according to Pepperstone Group.
“Reduced liquidity will be a factor as we roll through the month, but so could a potential performance chase from active managers to beat their set benchmark, with end-of-year rebalancing flows also due to impact,” said Chris Weston, head of research at Pepperstone in Melbourne. “When these dynamics reconcile with uncertainty as to various central banks’ next move, anyone hoping for a quiet last month of the calendar year may be disappointed.”
Emerging market assets including China’s yuan and South African rand may face volatility after Trump warned BRICS nations he will require a commitment that they won’t create a new currency, or favor another in a bid to displace the US dollar in global trade. Should they not meet Trump’s demands, he threatened to lob 100% tariffs on their goods entering the US.
“A somewhat perplexing target for tariffs, but I’m hesitant to think this rhetoric sees an immediate impact on the US dollar,” Weston said. “But it certainly showcases that Trump is fine with weaponizing the US dollar and using tariffs liberally and at any time.”
Trump’s pick for his Treasury secretary earlier this month had fueled optimism that tariffs will be measured, boosting US stocks and bonds, and sapping dollar strength. US stocks climbed 5.7% in November for the best month of this year, while the Bloomberg Dollar Spot Index declined more than 1% last week, snapping eight weeks of gains.
Chinese activity data released at the weekend showed factory activity continued to expand in November. That adds to tentative signs of economic recovery since October after a raft of stimulus measures including interest-rate cuts were announced in late September.
