Asian stocks rise, dollar at two-year high as US rates, Trump in focus By Reuters

By Ankur Banerjee

SINGAPORE (Reuters) – Asian shares rose on Friday, aiming to avoid a lackluster start to 2025, while the dollar hit a two-year high against a basket of currencies as investors fretted about longer U.S. interest rate hikes.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.33% higher, but down nearly 1% for the week.The index rose nearly 8% for the week :

Chinese shares were steady on Friday after falling on Thursday, underscoring growing worries about China’s economy and the possibility of a possible trade war when Donald Trump begins his US presidency this month.

China’s blue-chip CSI 300 was 0.16 higher in early trade, marking its weakest New Year’s start since 2016. Hong Kong was up 0.19%.

“The end of the year was a tough time for stocks, but strange things can happen in illiquid markets,” said Ben Bennett, Asia-Pacific investment strategist at Legal and General Investment Management.

“I don’t think we should extrapolate this performance. That said, a stronger dollar and higher bond yields will weigh on sentiment going forward, and equity investors will be hoping that changes soon.”

U.S. stocks closed broadly lower on Wall Street Thursday after initial gains were not sustained.Tesla (NASDAQ: ) fell 6.1% following its first annual drop in supplies. [.N]

The dour sentiment comes after a stuttering end to 2024, marring a year of growth fueled by growth expectations around artificial intelligence, a projected rate cut by the Federal Reserve and the prospect of deregulation by the incoming Trump administration.

But when the Fed shocked markets last month by predicting fewer rate cuts than previously expected and growing fears that Trump’s policies could be inflationary, bond yields rose, boosting the dollar and hurting stocks.

Vasu Menon, executive director of investment strategy at OCBC, said Trump’s pro-growth and pro-business agenda could boost the US economy, but it could be difficult for the rest of the world due to possible tariffs and a stronger dollar.

“So there is some caution and anticipation in the markets, especially after the strong investment performance over the last two years,” Menon said.

Overnight data showed the number of Americans filing new claims for unemployment benefits fell to an eight-month low of 211,000 last week, pointing to lower job cuts at the end of 2024 and a healthy labor market.

That bodes well for the US economy, with wage and inflation data later this month likely to be the focus for investors as they assess how measured the Fed’s rate-cutting approach is.

Traders are pricing in 44 basis points of easing this year, below the 50 bps forecast by the US central bank in December.

That brought the U.S. currency to 109.2 against six other units, slightly below a two-year high of 109.54 it hit on Thursday.The index rose 7% in 2024 as traders adjusted their interest rate expectations.

Meanwhile, the euro was among the biggest losers against the mighty greenback, falling 0.86% in the previous session to a more than two-year low of $1.022475.In Asian hours on Friday, it was at $1.0269, up 1. 6% decline, the worst since November. [FRX/]

The yen strengthened slightly to $157.295 per dollar, but was not far off a more than five-month low of $158.09 in December.

Among commodities, oil prices rose on optimism about China’s economy and demand for the fuel, following President Xi Jinping’s pledge to boost growth.

Futures rose 0.16% to $76.05 a barrel, while US West Texas Intermediate crude rose 0.18% to $73.25 a barrel.

Gold prices were steady at $2,658 an ounce after a 27% gain in 2024, its strongest annual performance since 2010. [GOL/]