Asian stocks edge up, Japan bond auction in focus

Asian stocks edged higher at the open, staging a tentative rebound after Monday’s selloff which saw cryptocurrencies lead declines in global risk assets.

Shares in Japan, Australia and South Korea all rose in early trading on Tuesday. Contracts for US stocks were little changed after the S&P 500 fell 0.5% and the Nasdaq 100 dropped 0.4%. Bitcoin edged lower to trade around $86,400 after losing more than 5% on Monday.

Focus will now turn to this year’s final auction of 10-year Japanese government bonds after increased speculation over an interest-rate hike saw yields surge on Monday. The yen was little changed against the dollar after rising the most in a week on Monday, when Bank of Japan Governor Kazuo Ueda sent the clearest hint yet that his board might raise rates soon.

China Vanke Co., the distressed builder that surprised markets last week when it proposed an unspecified delay in paying a local bond, also remains on investors’ radar. The firm has now asked holders to wait a year to be made whole, as it faces mounting liquidity pressure amid waning state support.

Global markets had a shaky start to December as nearly $1 billion of leveraged crypto positions were liquidated during Monday’s sharp drop that brought fresh momentum to a wide-ranging industry plunge.

Treasuries steadied after falling across the curve on Monday, leaving the US 10-year yield seven basis points higher at around 4.1%. A gauge of the dollar was steady in early Asian trading. Australia’s 10-year yield climbed five basis points.

Elsewhere, silver retreated from a record high, with a key technical indicator showing that a six-day rally has taken the white metal into overbought territory. Gold was little changed.

“There’s some risk aversion creeping into the markets to start the week,” said Kyle Rodda at Capital.com. “At the moment, it looks benign and without a fundamental impetus.”

US Economy

In the US, Federal Reserve officials will get a dated reading on their preferred inflation gauge before next week’s rate decision. The report due Friday is expected to show that inflationary pressures are stable, but sticky. Yet the debate will largely center on the job market when policymakers meet Dec. 9-10.

US energy producer stocks rose Monday, tracking an advance in oil. Crude prices climbed as a key pipeline linking Kazakh fields to Russia’s Black Sea coast halted loading after one of its three moorings was damaged amid Ukrainian attacks in the region over the weekend.

Data Monday showed US factory activity shrank in November by the most in four months as orders weakened. In addition to Friday’s inflation data, other relevant economic data this week include ADP private employment figures for November and a preliminary reading of consumer confidence in December.

Still, key data like the jobs report won’t arrive until after the December rate decision, which “drastically dilutes this week’s ability to spring any material surprises in as far as rate cut expectations are concerned,” noted Fawad Razaqzada at Forex.com.

“We have highlighted that stocks historically performed best when the economy is not in recession and the Fed is cutting interest rates,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management. “The latest available data suggest that the Fed is more likely to proceed with a 25-basis-point cut.”

She also noted that the current soft patch in the US economy is likely temporary, and global growth should accelerate in 2026.

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