Most Asia-Pacific markets experienced declines on Tuesday, following a downward trend in Wall Street. These market movements were driven by investor anticipation of the interest rate decision from the Reserve Bank of Australia later in the day.
Twenty-nine economists, who were surveyed by Reuters, unanimously predicted that the RBA would maintain rates at 4.35%. This expectation added to the cautious sentiment that dominated the markets.
Japan’s household spending in December revealed a 2.5% year-on-year decrease, which exceeded the expectations of economists polled by Reuters. These experts had predicted a smaller decline of 2.1%. Notably, the average monthly income per household for December dropped to 1,099,805 yen, decreasing by 4.4% in nominal terms and 7.2% in real terms compared to the previous year.
The Bank of Japan has emphasized that sustainable wage increases play a crucial role in unwinding its ultra-loose monetary policy. However, the recent decline in household spending suggests that wage growth is not yet strong enough to support such policy adjustments.
Australia’s S&P/ASX 200 index extended its losses from the previous day, falling 0.92% in anticipation of the RBA decision. Meanwhile, Japan’s Nikkei 225 index slipped 0.25%, and the Topix index experienced a larger decline of 0.37%.
South Korea’s Kospi index defied the downward trend and gained 0.23%, showcasing relative strength in comparison to other Asia-Pacific markets. Conversely, the small-cap Kosdaq index lost 0.16%.
Futures for Hong Kong’s Hang Seng index indicated a stronger opening, with a value of 15,650 compared to the HSI’s previous close of 15,510.01.
In the United States, all three major indexes experienced losses. These declines were influenced by an increase in Treasury yields, which raised concerns that the Federal Reserve might not implement as many interest rate cuts as previously anticipated. Furthermore, McDonald’s lackluster financial results further dampened investor sentiment. Specifically, the Dow Jones Industrial Average decreased by 0.71%, and the S&P 500 retreated from its all-time high, falling 0.32%.
Asia-Pacific markets had a mixed performance, with most markets following the downward trend in Wall Street. Investors eagerly awaited the interest rate decision from the Reserve Bank of Australia, which was widely expected to keep rates unchanged. Additionally, Japan’s weak household spending emphasized the need for sustained wage growth. The contrasting performances in South Korea reflected relative strength within the region. Overall, uncertainty surrounded the markets due to concerns over potential changes in the Federal Reserve’s policy and disappointing financial results from McDonald’s.
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