(Dec 24): Stocks in Asia are set to edge higher after a rally in some of the world’s largest technology companies lifted US benchmarks. 

Futures pointed to small gains in Tokyo, Hong Kong and Sydney, with shortened sessions in the latter two for Christmas Eve. In the US, Tesla Inc. and Nvidia Corp. drove a gauge of the “Magnificent Seven” megacaps up 1.4%, helping the S&P 500 close higher and erase a brief slide fueled by weaker-than-expected data on US consumer confidence.

“Primary uptrends remain intact for equities despite the recent profit-taking,” said Craig Johnson at Piper Sandler. “Given the short-term oversold conditions, we expect a ‘Santa Claus Rally’ to be a strong possibility this year.”

The S&P 500 added 0.7% and the Nasdaq 100 climbed 1%, while a gauge of US-listed Chinese shares gained 0.9%. Treasury 10-year yields advanced six basis points to 4.59%. The Bloomberg Dollar Spot Index rose 0.3%, gold fell and oil was little changed.

American-listed shares of Honda Motor Co. surged 13% after the Japanese car maker outlined plans for a drawn-out deal that amounts to an acquisition of Nissan Motor Co. The firm’s stock gained 3.8% in Tokyo on Monday.

Earlier Monday, US shares lost steam momentarily after data showed consumer confidence unexpectedly sank for the first time in three months on concerns about the outlook for the economy.

“The economic outlook is deteriorating,” said Neil Dutta at Renaissance Macro Research. “This was true before the Fed’s December confab and remains true. The risk of the Fed flip-flopping is quite high.”

The S&P 500 is on its way to record a stellar annual return and back-to-back years of more than 20% gains. The index has risen about 25% since the end of 2023, with the top seven biggest technology stocks accounting for more than half of the advance.

Whether or not the gauge will be able to stage a “Santa Claus Rally” continues to be a barometer of investors’ optimism into the new year. That seven-day period includes the last five trading days of the old year and the first two of the new one.

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