Asian shares and currencies gave mixed signals on Monday after opening in cautious trade and low liquidity. Many markets remained closed due to the holiday.
Stocks and currencies in Asia were mixed on Monday amid cautious trading and low liquidity with many markets closed for holidays.
Major indices for mainland China edged higher, Japan's Topix edged lower and South Korea's Kospi gauge declined. Other markets including Hong Kong, Singapore and Australia remained closed.
Risk appetite was dampened by concerns over China's ability to cope after abandoning its Covid zero policy. This was most evident in the decline in the Australian dollar, which is particularly sensitive to the demand outlook in China.
Amid a new wave of infections, China's National Health Commission said it would stop publishing daily case numbers for the coronavirus, complicating the task for investors trying to assess the economic impact.
The yen posted a small gain against the dollar as traders weighed in on the possibility of the Bank of Japan raising interest rates next year following a surprise adjustment to its 10-year yield target last week.
Friday's data showed Japan's core inflation gauge rose at its fastest pace since 1981, which could support more bets for change from the BOJ.
Meanwhile, stocks on Wall Street ended Friday's session with gains as investors digested data showing that US inflation is easing and the Federal Reserve's rate hike is serving its purpose.
That provided some degree of support for Asian markets, though the S&P 500 and the tech-heavy Nasdaq 100 still suffered their third straight week of losses.
Looking at the full year for global equities, 2022 has been the worst annual performance in over a decade.
"The Fed is telling us they are going to tighten financial conditions until there is a recession or some 'break'," Stephen Innes, managing partner at SPI Asset Management, wrote in a note. Especially the long term diversification is telling me in times like this, cash is the best investment to make."
There would be no cash trading of Treasuries on Monday, which ended the holiday-shortened session on Friday. The benchmark 10-year yield climbed last week to its most since early April, hovering around 3.75% on Friday.
Data on Friday closely followed the Federal Reserve's measures to cool inflation and stabilize consumer spending. A University of Michigan poll showed consumers' year-ahead inflation expectations also fell this month to their lowest since June 2021.
Elsewhere in the markets, bitcoin was little changed on Monday below $17,000 as the crypto world continued to reel from the collapse of FTX.
In commodities, everything from oil to gold and copper was up on Friday. Oil posted substantial weekly gains as Russia said it may cut crude output in response to a price cap imposed by the Group of Seven on its exports, highlighting risks to global supplies heading into the new year.
Major events of the week:
• China Industrial Profits, Tuesday
• US Wholesale Inventories, Tuesday
• BOJ summary of Wednesday's opinion, December 19-20 meeting
• US Initial Jobless Claims, Thursday
• ECB publishes economic bulletin on Thursday
Some key moves in the markets:
shares
• Japan's Topix was up 0.1% as of 10:46 a.m. Tokyo time
• South Korea's Kospi fell 0.3%.
• Shanghai Composite rose 0.2%
• The S&P 500 closed up 0.6% on Friday, while the Nasdaq 100 rose 0.3%.
Currencies
• The euro was little changed at $1.0615
• The Japanese yen rose 0.3% to 132.48 per dollar
• The offshore yuan was little changed at 7.0009 per dollar
• The Australian dollar fell 0.4% to $0.6694
crypto currency
• Bitcoin rose 0.1% to $16,851.96
• Ether rose 0.2% to $1,220.8
bond
• Japan's 10-year yield rose one basis point to 0.38%
• The yield on 10-year Treasuries rose seven basis points to 3.75% on Friday
Goods
• West Texas Intermediate crude rose 2.7% to $79.56 a barrel on Friday
• Spot gold rose 0.3% to $1,798.20 an ounce on Friday
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