South Korean Auto Stocks Surge Following U.S. Tariff Announcement
Shares of automotive manufacturers in South Korea experienced a notable uptick on Tuesday after U.S. Secretary of Commerce, Howard Lutnick, announced that reduced auto tariffs of 15% on imports from South Korea would be applied retroactively starting November 1. Lutnick also mentioned the removal of tariffs on aircraft components and stated that South Korea’s reciprocal tariff rates would be adjusted to align with those of Japan and the European Union. As a result, Hyundai Motor saw its shares increase by nearly 5%, while Kia Corp’s shares rose by approximately 3%. The South Korean stock market reflected this positive sentiment, with the Kospi index gaining 1.02%, although the smaller Kosdaq saw a slight decline of 0.13%.
South Korea’s Inflation Data Exceeds Expectations
According to government statistics released on Tuesday, South Korea’s inflation rate for November rose by 2.4% year-on-year, surpassing the anticipated increase of 2.35% that economists had predicted in a Reuters survey. The core inflation rate, which excludes volatile food and energy prices, recorded a 2% rise over the past year. This latest inflation figure remained consistent with the rate observed in October, strengthening the argument for the Bank of Korea to maintain its current interest rates. The central bank has held the interest rate steady at 2.5% for the fourth consecutive meeting as of last Thursday.
Asian Markets Mostly Gain with Japan Leading the Charge
Throughout the Asia-Pacific region, stock indexes primarily trended upward on Tuesday. Japan’s Nikkei 225 index saw an increase of 0.54%, while the Topix index rose by 0.44%. The financial, energy, and basic materials sectors were significant contributors to these gains. Notable performers on the Nikkei 225 included Fanuc, a prominent industrial robot manufacturer, which surged by 5.86%. NGK Insulators, known for producing diesel particulate filters, climbed by as much as 6%, and electrical equipment firm Fujikura added 2.29% to its stock value.
Japanese Government Bond Yields Hit New Highs
Yields on 10-year Japanese Government Bonds have climbed to 1.88%, reaching levels not seen since June 2008, amid increasing speculation regarding an imminent interest rate hike from the central bank. Additionally, the yield on 20-year JGBs rose to 2.915%, the highest since 1999, while the yield on 30-year JGBs reached a record high of 3.411%. Meanwhile, Australia’s ASX/S&P 200 index saw a modest increase of 0.12%.
Mixed Performance in Hong Kong and Indian Markets
At the start of trading, Hong Kong’s Hang Seng Index added 0.49%, while mainland China’s CSI 300 experienced a decline of 0.17%. In Hong Kong, Alibaba Group’s shares rose nearly 3% following the launch of its Quark artificial intelligence glasses in China on November 27, marking the third consecutive day of gains for the tech giant. Conversely, India’s Nifty 50 index opened down by 0.22%, and the BSE Sensex fell by 0.37%. A significant drop was observed in Bajaj Housing Finance shares, which plummeted over 8% after its parent company, Bajaj Finance, announced plans to sell up to 2% of its stake in the subsidiary.
U.S. Equity Futures Show Little Movement Amid Crypto Sell-Off
During Asian trading hours, U.S. equity futures exhibited minimal changes, following a five-day winning streak that was interrupted by a significant sell-off in the cryptocurrency market, adversely affecting investor confidence. The S&P 500 index fell by 0.53%, closing at 6,812.63, while the Nasdaq Composite dropped 0.38% to finish at 23,275.92. The Dow Jones Industrial Average experienced a retreat of 427.09 points, or 0.9%, settling at 47,289.33. In overnight trading, Bitcoin’s value plunged approximately 6%, trading below $86,000, which contributed to the negative sentiment impacting the broader stock market. As of 9:30 a.m. Tuesday (8:30 p.m. ET Monday) in Singapore, Bitcoin was valued at $86,866.49. The digital currency has struggled to maintain its value above $90,000 since it fell below that threshold for the first time since April. Other cryptocurrency-related stocks, including Coinbase and Strategy, also faced declines during Monday’s trading session in the U.S.
AI Sector Experiences Profit-Taking
Shares of companies in the artificial intelligence sector, such as Broadcom and Super Micro Computer, saw declines of over 4% and 1%, respectively, indicating a trend of profit-taking within this rapidly evolving industry.
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