Asian Stocks Hold Steady Amid US Rate-Cut Hopes
Asian stocks began the final month of 2025 with a steady performance on Monday, buoyed by optimism surrounding potential US rate cuts that enhanced risk sentiment ahead of upcoming economic data. Meanwhile, the yen strengthened as investors considered the possibility of a near-term rate hike. The focus in the currency market has shifted to the Japanese yen, which appreciated to 155.64 per US dollar as Bank of Japan Governor Kazuo Ueda addressed the audience in Nagoya, Japan, with investors closely analyzing his remarks for indications regarding the timing of the next interest rate increase. In a speech to business leaders, Ueda stated that the central bank will evaluate the “pros and cons” of increasing interest rates during its upcoming policy meeting in December. In stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan remained steady at 703.19, having gained 23.5 percent so far this year and on track for its best annual gain since 2017. In early trading, Japan’s Nikkei experienced a decline of 1.3 per cent.
US stock futures were lower during Asian hours, while Hong Kong’s Hang Seng index rose by over 1 percent, contributing to a rise in Asian stocks. “The risk bulls roll into December feeling positive about directional bias,” stated Chris Weston. “As the clouds of worry that cast an ominous shadow over markets through to mid-November gently dissipate, they give way to new emotions – notably the fear of not participating and the risk of underperforming benchmark targets.” This week, investors will turn their attention to US economic reports detailing manufacturing and services activity, alongside insights into consumer sentiment.
“With the US data void finally being filled and a busy economic calendar ahead, December looks set to be a merry one for volatility hunters,” stated Matt Simpson. Simpson stated that if the incoming data indicate a slowdown without leading to a recession, sentiment is likely to remain positive while the US dollar typically weakens during this time of year. The dollar index, which gauges the US currency in relation to six other competitors, stood at 99.414, showing minimal variation for the day. The index has experienced a decline of 8 per cent this year, with a significant portion of the losses occurring in the first half of the year. Investors are poised to pay close attention to remarks from Federal Reserve Chair Jerome Powell later today, seeking insights into the Fed’s upcoming decisions this month. Policymakers’ dovish comments have led investors to believe that a rate cut is imminent. Traders are factoring in an 87 percent likelihood of a cut later in the month.
Focus will also be directed towards initial signs of holiday consumer spending as information from Black Friday and Cyber Monday retail sales events begins to emerge. US shoppers spent a record $11.8 billion online, reflecting a 9.1 per cent increase from 2024 on Black Friday, according to analytics, which monitors 1 trillion visits to online retail websites. The market has concentrated on the yen in recent weeks, as uncertainties regarding the timing of the next interest rate hike and concerns about fiscal policies under Prime Minister Sanae Takaichi have positioned the currency within the intervention zone. Japan’s finance minister stated on Sunday that the recent erratic fluctuations in the foreign exchange market and the swift weakening of the yen are “clearly not driven by fundamentals,” marking yet another verbal warning that has yet to curb the yen’s decline. In commodities, oil prices experienced an uptick following OPEC+’s decision to maintain oil output levels for the first quarter of 2026 during its meeting, as the group moderates its efforts to reclaim market share amid concerns of an impending supply glut. Brent crude futures rose by 1 per cent, reaching $63.03 a barrel. US West Texas Intermediate crude was priced at $59.16 a barrel, reflecting an increase of 0.99 percent.
