The BSE Sensex lost ground to close about 1.5% down at 78,041.6 on Friday, the lowest level in a month and marking its fifth consecutive session of losses. The decline was broad-based, led by rate-sensitive IT stocks and heavyweight financials. Market sentiment remained subdued due to the prospect of fewer rate cuts by the Federal Reserve next year and sustained foreign outflows, further exacerbated by a weaker rupee. Meanwhile, traders looked ahead to the release of the US PCE price index for November later today, the Fed’s preferred inflation measure, for more insights into the rate path. For the week, the Sensex shed nearly 5%, halting four consecutive weeks of gains.
Chinese stocks ended nearly flat on Friday, with the Shanghai Composite slipping 0.06% to 3,368 and the Shenzhen Component edging down 0.02% to 10,647, as investors reacted to the latest policy decision from the People’s Bank of China. The central bank left its one- and five-year loan prime rates unchanged at 3.1% and 3.6%, respectively, in line with market expectations. Despite this, investors are still anticipating additional policy support in 2025, including further rate cuts, reductions in banks' reserve requirements, and stronger fiscal measures. Earlier this month, Chinese officials committed to "more proactive" fiscal measures and a "moderately" looser monetary policy next year to boost economic growth, signaling a shift away from the more cautious approach of the past decade. For the week, the Shanghai and Shenzhen indexes lost 0.7% and 0.62%, respectively.
The Nikkei 225 Index dropped 0.29% to close at 38,702, while the broader Topix Index fell 0.44% to 2,702 on Friday, marking the sixth consecutive session of losses as investors reacted to stronger-than-expected inflation data. Japan's headline inflation rate rose to a three-month high of 2.9% in November, up from 2.3% in October, while the core inflation rate increased to 2.7%, surpassing market expectations of 2.6%. These figures support a hawkish outlook for Bank of Japan (BOJ) monetary policy. However, the BOJ chose to keep rates unchanged at its December meeting, citing the need to assess wage trends, global economic uncertainties, and the policies of the incoming US administration. Technology, industrial, and consumer stocks led the decline. Over the week, the Nikkei and Topix indexes lost 1.95% and 1.62%, respectively.
