Asian stock markets were quiet on the first trading day of 2024

Investing.com – Asian stocks traded in a tight range on the first trading day of 2024 as weak economic reports from China dampened sentiment and Japan’s devastating earthquake also affected market psychology.

Most markets in the region have also had to adjust after strong gains throughout December amid growing speculation that the Federal Reserve will cut interest rates in early 2024. Asian trading was steady on Tuesday.

Sentiment in Asian markets was also affected by a powerful earthquake in central Japan that destroyed many homes and disrupted rail lines in the region. Japanese markets were closed for a week-long holiday, but the index fell 0.4%. The index was the best-performing major stock index in 2023, rising nearly 30%.

Chinese stocks continue to lag rivals after a sharp fall in 2023, with recent PMI data showing little improvement in business activity.

China’s blue-chip index fell 1.1%, extending a fall of more than 12% since 2023, as weak official PMI data showed continued weakness in the world’s second-largest economy. The blue-chip index also fell to an almost five-year low.

The index fell 0.3% on Tuesday, while Hong Kong’s index fell 1.7% as mainland stocks fell.

China’s December data fell more than expected, and the average for 2023 also contracted. The downward trend continued in December.

While manufacturing activity showed some signs of recovery, growth remained largely modest as foreign demand for Chinese goods continued to be weak.

China’s post-COVID-19 economic recovery has largely failed to materialize in 2023 due to deflation and slow government stimulus measures. This has left investors largely wary of the Chinese market, which has seen sustained capital outflows during the year.

Broader Asian markets were mixed, with Australia up 0.4% and South Korea down 0.1%.

Indian stock index futures opened weakly, with Indian stocks taking profits after a sharp rise in 2023. The Nifty index also remains at a record high.

The market is awaiting further signals on U.S. interest rate cuts this week, mainly from key December data expected on Friday. However, expectations for the Federal Reserve to cut interest rates early still basically exist, with traders saying that the probability of a 25 basis point interest rate cut in March is more than 70%.

Expectations of an early interest rate cut by the Federal Reserve drove strong gains on Wall Street throughout December and then spread to Asian markets. But whether this rebound can be sustained will largely depend on U.S. economic data.