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Asian stocks meander, with Nikkei rising on weak yen

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Yen wallows at five-month lows, set for 10% fall in 2024

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Moves muted due to thin year-end trading

By Ankur Banerjee

SINGAPORE, Dec 27 (Reuters) - Asian stocks wobbled on

Friday while the dollar was steady, keeping the yen rooted near

five-month lows in thin year-end trading as investors looked

ahead to 2025, when the Federal Reserve is expected to be

measured in its interest rate cuts.

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 little changed at 157.80 per

dollar, taking its losses for the year against the dollar to

over 10% in 2024, 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.

Over in stocks, MSCI's broadest index of Asia-Pacific shares

outside Japan was slightly higher at 574.88, on

course for nearly 9% gain this year. Japan's Nikkei rose

0.77% due to a weak yen, set for 19% rise in 2024.

China's blue-chip CSI300 Index was little changed

in early trading while the Hong Kong's Hang Seng index

was 0.12% higher following a holiday on Thursday.

"There's obviously a lull at the moment and barring an

extreme surprise the markets are probably going to lack

direction," said Kyle Rodda, senior financial market analyst at

Capital.com.

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 the markets earlier this month as it lowered

rates by 25 basis points but projected just two rate cuts next

year, down from four cuts it had projected in September. Traders

are pricing in 37 bps of easing next year with the next cut

fully priced in for June.

"Simply put, if the markets can feel comfortable with the

notion of two cuts from the Fed next and that's subsequently

backed by goldilocks data once trading conditions normalise,

then the bull market may have more legs," said Rodda.

The shifting expectations around U.S. rates have led 10-year

Treasury yield to its highest since early May. It

was last at 4.57% in Asian hours. The dollar index, which

measures the U.S. unit against six other large peers, was at

108.11, not far from the two year high it touched last week.

In commodities, gold prices eased to $2,631.34 per

ounce, but were set for about 28% rise for the year, their

strongest yearly performance since 2011.

Oil prices were lower in early trading. Brent crude futures

and U.S. West Texas Intermediate crude were both

0.1% lower.