Asian shares mixed as holiday-shortened week begins on shaky note

Asian markets were mixed on Tuesday after stocks in Wall Street shook off a choppy start to finish higher the previous day as it kicked off a holiday-shortened week.

US futures were little changed and oil prices rose.

Honda shares surged more than 16 per cent as the Japanese auto giant announced an up to 1.1 trillion yen (USD 7 billion) share buyback and meanwhile, held a merger talk with Nissan.

The two companies said they had signed a memorandum of understanding on Monday and that smaller Nissan alliance member Mitsubishi Motors Corp. also had agreed to join the talks on integrating their businesses. Nissan's share shed 0.1 per cent on Tuesday.

 

Japan's benchmark Nikkei 225 slipped 0.3 per cent in morning trading to 39,055.35.

South Korea's consumer sentiment sharply dropped in December amid rising concerns over political uncertainty following the parliament's impeachment of President Yoon Suk Yeol. The decline hit the lowest level since November 2022, when a Halloween crowd crush resulted in 159 fatalities.

South Korea's Kospi lost 0.3 per cent to 2,436.67.

The Hang Seng in Hong Kong added 1.2 per cent to 20,119.47 and the Shanghai Composite index was up 0.7 per cent at 3,374.58. Australia's S&P/ASX 200 advanced 0.3 per cent to 8,225.00.

Taiwan's Taiex gained 0.5 per cent, with Taiwan Semiconductor Manufacturing Co. shares reaching a record high during the early trading day.

On Monday, the S&P 500 ended 0.7 per cent higher to 5,974.07 after having been down 0.5 per cent in the early going. The Dow Jones Industrial Average also recovered from an early slide to eke out a 0.2 per cent gain to 42,906.95. The tech-heavy Nasdaq composite rose 1 per cent to 19,764.89.

Traders got a look at a new snapshot of US consumer confidence Monday. The Conference Board said that consumer confidence slipped in December. Its consumer confidence index fell back to 104.7 from 112.8 in November. Wall Street was expecting a reading of 113.8.

The unexpectedly weak consumer confidence update followed several generally strong economic reports last week. One report showed the overall economy grew at a 3.1 per cent annualised rate during the summer, faster than what was thought earlier. The latest report on unemployment benefit applications showed that the job market remains solid.

A report on Friday said that a measure of inflation the Federal Reserve likes to use was slightly lower last month than economists had expected. Worries about inflation edging higher again had been weighing on Wall Street and the Fed.

The central bank just delivered its third cut to interest rates this year, but inflation has been hovering stubbornly above its target of 2 per cent. It has signalled that it could deliver fewer cuts to interest rates next year than it earlier anticipated because of concerns over inflation.

Expectations for more interest rate cuts have helped drive a roughly 25 per cent gain for the S&P 500 in 2024. That drive included 57 all-time highs this year.

Inflation concerns have added to uncertainties heading into 2025, which include the labor market's path ahead and shifting economic policies under an incoming President Donald Trump.

"Put simply, much of the strong market performance prior to last week was driven by expectations that a best-case scenario was the base case for 2025," said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company  Treasury yields rose in the bond market. The yield on the 10-year Treasury rose to 4.59 per cent from 4.53 per cent late Friday.

Wall Street has several other economic reports to look forward to this week. The United States will release its November report for sales of newly constructed homes later in the day. A weekly update on unemployment benefits is expected on Thursday.

Markets in the US will close at 1 pm Eastern on Tuesday for Christmas Eve and will remain closed on Wednesday for Christmas.

In other dealings, US benchmark crude oil picked up 23 cents to USD 69.47 per barrel. Brent crude, the international standard, was up 26 cents at USD 72.58.

The dollar traded at 157.07 yen by early Tuesday, down from 157.14 yen. The euro fell to USD 1.0397 from USD 1.0408.