World shares are mixed and Japan’s yen slips after AI stocks push higher on Wall Street

Global Markets Mixed as Tech Stocks Lead Wall Street Rally

Global markets showed mixed performance on Monday as investors responded to a late-week rally on Wall Street driven by AI-related stocks, particularly Nvidia.

European markets displayed little consensus in early trading. Germany’s DAX edged up 0.1% to 24,315.90, while France’s CAC 40 dipped 0.2% to 8,135.23. Britain’s FTSE 100 declined 0.3% to 9,864.71. Meanwhile, futures for the S&P 500 and Dow Jones Industrial Average showed modest gains of 0.4% and 0.2%, respectively.

Asian markets performed more robustly, with Tokyo’s Nikkei 225 surging 1.8% to 50,402.39. The Japanese market benefited significantly from gains in semiconductor and AI-related companies. Tokyo Electron jumped 6.3%, while chip testing equipment manufacturer Advantest rose 4.5%.

Financial institutions and exporters in Japan also saw positive movement following the Bank of Japan’s decision on Friday to raise its key policy rate to its highest level in 30 years. Contrary to expectations, this move has not strengthened the yen, which has instead weakened against the dollar.

Early Monday, the dollar traded at 157.45 yen, slightly down from 157.60 late Friday. The currency movement prompted Atsushi Mimura, a top Finance Ministry official overseeing foreign exchange issues, to warn that regulators would intervene to prevent excessive fluctuations in the yen.

In China, markets showed upward momentum with the Hang Seng in Hong Kong gaining 0.4% to 25,901.77 and the Shanghai Composite advancing 0.7% to 3,917.36. As anticipated, China’s central bank maintained its 1-year and 5-year loan prime rates unchanged.

Other Asian markets also performed strongly. South Korea’s Kospi added 2.1% to 4,105.93, while Taiwan’s Taiex rose 1.6%, bolstered by chip manufacturer TSMC’s 2.5% gain. Australia’s S&P/ASX 200 increased 0.9% to 8,699.90.

“Asian equity markets are stepping onto the floor with a constructive bias, taking their cue from Friday’s solid rebound in U.S. stocks and the growing belief that the final stretch of the year still belongs to the bulls,” noted Stephen Innes of SPI Asset Management.

On Wall Street last Friday, the S&P 500 rose 0.9%, finishing the week with a modest 0.1% gain. The Dow Jones Industrial Average increased 0.4%, while the Nasdaq composite advanced 1.3%, securing a 0.5% weekly gain.

Nvidia was the primary driver of market gains, rising 3.9%, while Broadcom jumped 3.2%. The technology sector has been the engine of Wall Street’s performance throughout the year, with heavily weighted companies like Nvidia exerting outsized influence on market movements. However, investors have increasingly scrutinized these high valuations, questioning their sustainability.

Oracle shares climbed 6.6% following news of its involvement, along with two other investors, in forming a new TikTok U.S. joint venture. Oracle, Silver Lake, and MGX each acquired a 15% stake in the popular social video platform, ensuring its continued operation in the United States.

In contrast, homebuilders faced setbacks after reports showed home sales declined year-over-year for the first time since May. KB Home fell 8.5% on the news.

A University of Michigan survey revealed that consumer sentiment in December improved slightly from November but remains significantly lower than a year ago. Consumer confidence has deteriorated throughout 2024 as persistent inflation squeezes household budgets, the job market cools, and retail sales weaken.

While inflation remains above the Federal Reserve’s 2% target, the central bank cut its benchmark interest rate at its most recent meeting due to concerns about the slowing job market’s impact on the economy. However, further rate cuts could potentially fuel inflation, creating a delicate balancing act for policymakers. Market participants largely expect the Fed to maintain current rates at its January meeting.

In commodities markets, U.S. benchmark crude oil gained 57 cents to $57.09 per barrel, while Brent crude, the international standard, increased 58 cents to $61.05 per barrel. The euro edged up slightly to $1.1726 from $1.1720.