- Asian Stocks Slide, Oil Rises on Russia Sanctions: Markets Wrap
Stocks and bonds slid in Asia following Friday’s stronger-than-expected US jobs data, while oil climbed to a
four-month high as a fresh wave of American sanctions on Russia threatened to crimp supplies. MSCI’s index
of regional equities slipped for a fourth day as the US payroll numbers damped bets on further Federal
Reserve interest-rate cuts. US equity futures pointed to further losses on Wall Street after the S&P 500 fell
1.5% on Friday. Japanese markets are shut for a holiday, meaning there’s no trading in cash Treasuries in
Asia. - Dow tumbles nearly 700 points Friday as strong jobs report casts doubt over Fed’s rate-cut path
Stocks dropped on Friday after a hot jobs report dampened Wall Street’s expectations for more interest rate
cuts from the Federal Reserve this year. The Dow Jones Industrial Average lost 696.75 points, or 1.63%, to
close at 41,938.45. The S&P 500 slid 1.54% to 5,827.04, while the Nasdaq Composite fell 1.63% to 19,161.63.
Friday’s losses pushed the major benchmarks into the red for 2025. U.S. payrolls grew by 256,000 in
December, while economists polled by Dow Jones expected to see an increase of 155,000. The
unemployment rate, which was projected to remain at 4.2%, fell to 4.1% during the month. The yield on
the 10-year Treasury note spiked to its highest level since late 2023 after the report. - Oil jumps on expectations new U.S. sanctions to cut Russian supply
Oil prices extended gains for a third session on Monday, with Brent rising above $81 a barrel to its highest in
more than four months, as wider U.S. sanctions are expected to affect Russian crude exports to top buyers
China and India. Brent crude futures climbed $1.48, or 1.86%, to $81.24 a barrel by 0113 GMT after hitting an
intraday high of $81.49, the highest since Aug. 27. U.S. West Texas Intermediate crude rose $1.53, or 2% to
$78.10 a barrel after touching a high of $78.39, the most since Oct. 8. Brent and WTI have risen by more than
6% since Jan. 8 and both contracts surged after the U.S. Treasury imposed wider sanctions on Russian oil on
Friday. The new sanctions included producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that
have shipped Russian oil, targeting the revenue Moscow has used to fund its war with Ukraine.
Russian oil exports will be hurt severely by the new sanctions, pushing China and India, the world’s top and
third largest oil importers respectively, to source more crude from the Middle East, Africa and the Americas,
which will boost prices and shipping costs, traders and analysts said. - Gold holds steady amid Trump policy uncertainty, upbeat U.S. data
Gold prices were flat on Monday as a stronger-than-expected U.S. jobs report reinforced the Federal
Reserve’s cautious stance on rate cuts, while uncertainty surrounding the incoming Trump administration’s
policies continued to fuel safe-haven demand. Spot gold held ground at $2,689.09 per ounce as of 0212 GMT,
hovering near the one-month high hit on Friday. U.S. gold futures gained 0.2% to $2,719.50. - Strong December Jobs Report Kills Chances Of A January Fed Rate Cut
The December jobs report revealed a drop in the unemployment rate to 4.1%, accompanied by a rise and
acceleration in monthly net non-farm payroll gains of 256,000. Before the jobs report was released, the odds
were already low for an interest rate cut in the next Federal Reserve decision on January 29. However, the
strong December jobs report is the nail in the coffin for January rate cut expectations. With solid labor
market data and near-term risks of an acceleration in year-on-year consumer inflation rates, the next Fed
rate cut may not happen until May 2025. - China’s imports post surprise growth in December; exports beat expectations as higher tariffs loom
China’s exports and imports in December both beat expectations by a large margin, data from the
country’s customs authority showed Monday. China’s domestic demand has been hit due to a prolonged
real estate crisis, leaving the country more reliant on exports to power its growth. The outlook for
exports for the full year, however, appears less optimistic, as “potential tariff hikes could dampen
momentum,” said Bruce Pang, distinguished senior research fellow at the National Institution for
Finance and Development. - China Boosts Yuan Support With Warning, Capital Control Tweaks
China has ramped up its support for the yuan with tweaks to its capital controls and a vow to crack down on
market disruption, after the currency dropped close to a record low against the dollar in offshore trading. The
People’s Bank of China and other regulators pledged to strengthen their management of the foreign
exchange market, deal with any behavior that may disrupt the market and prevent the risk of a large move in
the yuan. Beijing will make sure the currency is basically stable at reasonable levels, the central bank said in a
statement. The PBOC also adjusted its rules for cross-border flows on Monday, allowing firms and financial
institutions to borrow more from overseas, which may help increase capital inflows and support the yuan.
And the central bank issued a daily reference rate at a level much stronger than analysts’ estimates, sending
its most forceful signal since April that it intends to stabilize the exchange rate. - UK Home Sellers Made Smallest Profit in Over a Decade in 2024
UK home sellers made the lowest profit in more than a decade last year as high interest rates and a cost-of
living squeeze sapped demand. The average gross profit on a sale in England and Wales was £91,820
($112,929) in 2024, or 42%, according to a report from broker Hamptons International. That represents a
drop of 11% from £102,650 a year earlier, showing how discounts hurt earnings. “Households have had to
grapple with higher mortgage and transaction costs, such as stamp duty, making it more costly to move,” said
Aneisha Beveridge, head of research at Hamptons. “Until property prices recover, or transaction and
mortgage costs decrease, homeowners are likely to stay put for longer.” The UK’s housing market endured a
challenging 2024, as higher mortgage rates reduced competition for homes and restricted sellers’ ability to
hike asking prices. A pullback in rate-cut bets pushed the five-year swap rate to the highest level since May
last week, raising the prospect that home loan costs are going to increase again. - Trump seeks Putin meeting as Biden administration announces 11th-hour aid package to Kyiv
President-elect Donald Trump floated the possibility of a meeting with Kremlin leader Vladimir Putin to bring
an end to the devastating conflict in Ukraine. “President Putin wants to meet. He’s said that even publicly.
And we have to get that war over with, that’s a bloody mess,” Trump said Thursday. On Thursday, the U.S.
Department of Defense announced a $500 million aid tranche for Ukraine, a mere 10 days before President
Joe Biden’s scheduled exit from the White House. - Tesla launches refreshed Model Y in China to fend off domestic rivals
Tesla on Friday announced a revamped version of its popular Model Y in China, as the U.S. electric car giant
looks to fend off challenges from domestic rivals. The Model Y will start at 263,500 Chinese yuan ($35,935),
with deliveries set to begin in March. The refreshed Model Y has a longer driving range on a single charge and
a faster acceleration speed. - Goldman Sachs now expects two Fed rate cuts this year, down from three
Goldman Sachs analysts said they now expect the Federal Reserve to cut interest rates twice this year, down
from their prior forecast of three cuts, amid increased concerns over sticky inflation and labor market
strength. GS expects two rate cuts in 2025- in June and December, and one additional cut in 2026, bringing
the Fed’s terminal rate to 3.5% to 3.75%, from current levels of 4.25% to 4.5%. The investment bank’s shift in
expectations came just after stronger-than-expected nonfarm payrolls data for December, which spurred
increased bets that the Fed will have little immediate impetus to keep cutting interest rates. The reading also
triggered steep losses on Wall Street. The Fed cut rates by 1% through 2024, but warned of a much slower
pace of cuts this year. The central bank had effectively slashed its outlook on rate cuts to a projected two
from four for 2025, citing concerns over sticky inflation and a strong labor market. GS analysts said that while
their baseline forecast for rates remained somewhat more dovish than market pricing, it was hard to have
“great conviction in the timing of cuts” due to expectations of robust U.S. economic data, which made cuts
reasonable but not critical. - Apple’s market share slides in China as iPhone shipments decline, analyst Kuo says
Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo
wrote in a report on Friday. The stock slid 2.4%. “Apple has adopted a cautious stance when discussing 2025
iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added
that despite the expected launch of the new iPhone SE 4, shipments are expected to decline 6% year over
year for the first half of 2025. Kuo expects Apple’s market share to continue to slide, as two of the coming
iPhones are so thin that they likely will only support eSIM, which the Chinese market currently does not
promote. “These two models could face shipping momentum challenges unless their design is modified,” he
wrote. Kuo wrote that in December, overall smartphone shipments in China were flat from a year earlier, but
iPhone shipments dropped 10% to 12%. There is also “no evidence” that Apple Intelligence, the company’s
on-device artificial intelligence offering, is driving hardware upgrades or services revenue, according to Kuo.
He wrote that the feature “has not boosted iPhone replacement demand,” according to a supply chain survey
he conducted, and added that in his view, the feature’s appeal “has significantly declined compared to cloud
based AI services, which have advanced rapidly in subsequent months.” Apple’s estimated iPhone shipments
total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo
wrote. That is “below the market consensus of 240 million or more,” he wrote. - World’s biggest chipmaker TSMC posts record 2024 revenue as AI boost continues
Taiwan Semiconductor Manufacturing Co. posted December quarter revenue that topped analyst estimates,
as the company continues to get a boost from the AI boom. The world’s largest chip manufacturer reported
fourth-quarter revenue of 868.5 billion New Taiwan dollars ($26.3 billion), according to CNBC calculations, up
38.8% year-on-year. That beat Refinitiv consensus estimates of 850.1 billion New Taiwan dollars.
For 2024, TSMC’s revenue totaled 2.9 trillion New Taiwan Dollars, its highest annual sales since going public
in 1994.
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