Stock futures traded in a narrow range as most Asian shares rose, fueled by optimism that the year-end will bring strong returns for equities. Treasuries fell as demand for safe-haven assets decreased.
The MSCI Asia Pacific Index rose for a fourth consecutive day, led by Japan and Taiwan. Japanese shares gained after Bank of Japan Governor Kazuo Ueda avoided hinting at a potential interest rate hike. European markets were mostly closed for the Christmas break, while U.S. trading resumed.
Equity investors are hoping for a “Santa Claus Rally,” where stocks typically rise during the final days of the year and into the new year. This rally began on Tuesday.
Analysts expects Asian markets to continue climbing, driven by momentum from the pre-Christmas period and the weaker yen, which supports Japanese stocks. Retail company stocks rose thanks to a new tourism agreement between Japan and China, where the two countries worked to improve their relations by easing visa regulations for Chinese tourists.
Bank of Japan Governor Ueda’s comments on keeping rates unchanged kept the yen weaker. Chinese computing stocks gained after the government announced plans to include the sector in local government bonds.
U.S. Treasury 10-year yields rose to 4.61%, ahead of a $44 billion bond auction. The dollar moved unevenly against other major currencies.
The S&P 500 has historically performed well during the “Santa Claus Rally,” with average returns of 1.3%. The index closed 1.1% higher on Tuesday, continuing its 27% gain for the year. The Nasdaq 100 rose 1.4%, and the Dow Jones added 0.9%. note that large tech stocks remain the main drivers.
In commodities, oil prices held steady after gains on Tuesday, influenced by China’s stimulus efforts and expectations for U.S. stockpile changes.
