Asian stock markets showed limited movement on Thursday as trading volumes remained low due to holidays in several major markets. However, Japanese stocks surged following reports of a record budget plan for the country’s upcoming fiscal year.
Muted Trading Amid Holidays
Stock exchanges in Indonesia and Hong Kong were closed for Christmas, while markets in Australia and New Zealand remained shut for the Boxing Day holiday. As a result, trading activity was subdued across the region. U.S. stock index futures, which typically offer guidance for global markets, were largely flat in early Asian trade.
Recent trading sessions have been marked by cautious sentiment, following the Federal Reserve’s signal of a slower pace of interest rate cuts in 2025. This outlook has raised concerns for risk-sensitive assets, leading to a more muted tone in Asian markets.
Japan Shares Jump on Record Budget Plans
In contrast to the broader region, Japanese stocks posted solid gains. The Nikkei 225 index rose by nearly 1%, while the TOPIX climbed 0.6%, bolstered by news that the Japanese government is preparing a record budget for the fiscal year starting in April 2024.
According to a draft budget obtained by Reuters, Japan is planning to spend a total of 115.5 trillion yen ($735 billion), primarily due to rising social security costs and debt-servicing expenses. This budget comes as the Bank of Japan begins to step back from its decade-long stimulus program, increasing the pressure on the government to take a more active role in sustaining the economy.
Japan’s central bank governor, Kazuo Ueda, indicated on Wednesday that the economy is expected to make progress toward the Bank of Japan’s 2% inflation target by next year. This raises speculation that an interest rate hike may be on the horizon. However, Ueda also stressed the importance of closely monitoring global economic uncertainties, especially concerning U.S. policy under President-elect Donald Trump.
Chinese Stocks Muted Despite Stimulus Measures
In China, stock markets saw little movement despite the government’s announcement of an ambitious stimulus plan. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were largely unchanged, reflecting a cautious market stance.
Chinese authorities revealed plans to issue a record 3 trillion yuan ($411 billion) in special treasury bonds next year to support the country’s flagging economy. The government also introduced measures to simplify investment approvals and expand the use of public funds for growth-boosting projects.
Despite these efforts, market participants remain uncertain about the full scope and effectiveness of China’s stimulus measures, with many awaiting more details about fiscal policy plans for the coming year.
Other Asian Markets Show Marginal Moves
Elsewhere in Asia, stock markets remained largely unchanged. South Korea’s KOSPI and Thailand’s SET Index showed little movement, while Singapore’s FTSE Straits Times Index fell by 0.2%. In India, Nifty 50 Futures suggested a weak start to trading, with the Indian market grappling with significant losses over the past few weeks.
As markets close out the year, investors are looking for further clarity on global economic conditions and government fiscal responses, particularly in light of slower expected interest rate cuts by the U.S. Federal Reserve and ongoing stimulus efforts in Asia.
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