Asia markets mostly fall as investors assess Nvidia results, Adani charges

Asian markets will look “very different” in 2025 in light of China’s new policy measures, the slowing Indian economy and Southeast Asian countries’ investments into new infrastructure, according to HSBC.

Still, several stocks can “benefit from these changes in Asia as they are best positioned to capture growth from these opportunities and that our analysts like from a bottom-up perspective,” the bank’s analysts noted.

“In highlighting these stocks, we decided to look outside of consensus ideas, which are generally well owned, and our aim is to highlight quality stocks that are relatively underappreciated,” they said, naming three of their top ideas.

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— Amala Balakrishner

The stock market has always pulled back when valuations are stretched as they are now, according to Deutsche Bank macro strategist Henry Allen in a note to clients this week.

“[T]urning points can happen quickly, and … when valuations are stretched to start with, there can be limited scope for further gains,” Allen noted. “[E]xamples of high returns through history have often been followed by sizeable reversals.”

The bank cited lofty current readings in the Cyclically Adjusted Price-to-Earnings (CAPE) ratio developed by economist Robert Shiller, arguing that “the CAPE ratio for the S&P 500 has only been higher on two other occasions in the last century” than it is today.

During the dot-com bubble of the late 1990s and the period before the Global Financial Crisis in 2008, “there was little scope for further gains since valuations were already so stretched to start with, and they were each followed by a significant correction,” Allen wrote. “Indeed, on both the occasions the CAPE ratio has got as high as it is today, there was then a significant correction.”

— Scott Schnipper

Federal Reserve Governor Michelle Bowman said Wednesday that progress on bringing inflation back to the central bank’s goal has slowed.

“We have not yet met our inflation goal and, as I noted earlier, progress in lowering inflation appears to have stalled,” Bowman said in remarks in West Palm Beach, Florida. “I see greater risks to the price stability side of our mandate, especially while the labor market remains near full employment, but it is also possible that we could see a deterioration in labor market conditions.”

Recent data has indicated that the Fed has neared its 2% inflation target, though the all-items consumer price index nudged higher in October and the core rate indeed has held steady around 3.3% since August.

Inflation concerns caused Bowman to vote against the half-percentage-point interest rate cut in September, though she did vote for the quarter-point reduction earlier this month, which she would have preferred for the initial move. The policymaker said she approaches her role “in an independent way, relying on facts, analysis, my own experience and judgment,” and with the inflation mandate in mind.

“In some cases, this approach has led me to depart from the views of my colleagues,” she said.

— Jeff Cox

Federal Reserve Governor Lisa Cook said Wednesday that she sees inflation continuing to ease while the labor market “remains solid” despite some recent signs of weakness.

Consequently, she expects the central bank to continue lowering its benchmark interest rate, though the path ahead is uncertain.

“Going forward, I still see the direction of the appropriate policy rate path to be downward, but the magnitude and timing of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” Cook said in remarks at the University of Virginia.

While inflation, particularly at the core excluding food and energy, remains above the Fed’s goal, she expects progress to continue as housing services prices, such as rent, slow their ascent.

— Jeff Cox