Asian stocks gain slightly as investors anticipate 2025, dollar strengthens

Asian stocks saw modest gains on Friday, while the dollar remained steady, keeping the yen near five-month lows amid light year-end trading.

Investors are looking ahead to 2025, where the Federal Reserve is expected to adopt a cautious stance on rate cuts, News.az reports, citing Reuters.

The Bank of Japan, on the other hand, could raise rates in the near-term, with the summary of opinions at the bank's December meeting released on Friday keeping alive the chance of a January hike. The BOJ had chosen to stand pat in its December meeting.

That has left the yen loitering around levels last seen in July. On Friday, it was a tad stronger at 157.59 per dollar, still down over 10% in 2024 against the dollar, its fourth straight year of decline.

The currency has been under pressure from a strong dollar and a wide interest rate gap that persists despite the Fed's rate cuts, with traders wary of another bout of intervention from Tokyo as the yen approaches 160 levels.

In stocks, MSCI's broadest index of Asia-Pacific shares outside Japan was 0.1% higher at 575.11, on course for nearly a 9% gain this year. Japan's Nikkei shot up 2% due to a weak yen, set for about 21% rise in 2024.

China's blue-chip CSI300 Index was 0.1% higher while the Hong Kong's Hang Seng index rose 0.3% following a holiday on Thursday.

European markets are likely to open higher, with Eurostoxx 50 futures up 0.5%, German DAX futures up 0.3% and FTSE futures 0.08% higher.

With only a handful of trading days remaining in the year, investor focus has switched to 2025, with the Fed's policy path, the incoming Trump administration and its tariff-related policies and geopolitical worries in the spotlight.

The Fed jolted markets earlier this month as it lowered rates by 25 basis points but projected just two rate cuts next year, down from four it had projected in September. Traders are pricing in 37 bps of easing next year with the next cut fully priced in for June.

News.Az