Asian equity markets opened the week on a positive note, shrugging off political turbulence in the United States that rattled currency markets and boosted safe-haven assets like gold. Investor sentiment was shaped by an unprecedented legal move against the US central bank and mixed economic signals.
Markets React to Fed Subpoena and Jobs Data
The key driver for global markets was the confirmation that the US Justice Department issued a subpoena to the Federal Reserve. Federal Reserve Chair Jerome Powell acknowledged the action late on Sunday, describing it as "unprecedented." He linked it to pressure from US President Donald Trump for more interest rate cuts, despite the Fed's prior signals that rates would hold steady. Powell clarified that the grand jury subpoenas received on Friday were related to his June Senate testimony concerning a major renovation of Fed office buildings.
This political tension followed the release of weaker-than-expected US labour data on Friday. The report showed the US economy added only 50,000 new jobs in December, though the unemployment rate ticked down to 4.4 percent.
Asian Indices Climb, Dollar Weakens
Financial markets reacted swiftly to the developments. The dollar slipped around 0.2% against a basket of major currencies. In contrast, gold prices jumped 1.5% as investors sought safety.
Mirroring Wall Street's strong close from the previous week, equity markets across the Asia-Pacific region moved higher in early Monday trading:
- Hong Kong's Hang Seng Index (HSI) gained 208 points, or 0.79%, to reach 26,439.
- Japan's Nikkei surged 822 points, a rise of 1.6%, to 51,939.
- Mainland China's Shenzhen and Shanghai composites added 1.2% and 0.78%, respectively.
- South Korea's Kospi was trading in the green, up 29 points around 11:11 AM IST.
Gains were also recorded in Taipei, Bangkok, Manila, Singapore, Kuala Lumpur, and Jakarta, indicating broad regional optimism.
Geopolitical Worries Underpin Commodity Markets
Oil prices experienced a slight dip on Monday but largely held onto gains from last week's rally. Market attention remained on geopolitical hotspots. Ongoing protests in Iran continued to fuel concerns, compounded by the US seizure of Venezuela's crude supplies, which added to worries about global supply dynamics.
President Trump warned Iran of consequences if demonstrators were harmed, while Tehran cautioned against foreign interference. On Sunday, Trump stated he was "weighing potential military action" following reports of a violent crackdown.
The strong start for Asian markets follows a robust beginning to the year globally. Stock indices in Frankfurt, London, Paris, and Seoul had touched record highs last week, driven by optimism in technology and defence sectors.
