Asian Stocks Surge on Weakness US Data Fuels Rate-Cut Speculation
Asian stocks experienced an uptick on Wednesday, following the positive momentum. This rise was fueled by weaker-than-anticipated economic data, which heightened expectations that the Federal Reserve may lower interest rates during its policy meeting next month. MSCI’s broadest index of Asia-Pacific shares outside Japan rose by 1 per cent, following mild gains in US stocks at the end of the previous session. Japan’s Nikkei stock index increased by 1.8 per cent, while US stock futures rose by 0.2 per cent. US stocks regained their footing following a selloff earlier this month, as the S&P 500 and Nasdaq Composite experienced gains for a third straight day on Tuesday. This movement came after data indicated that retail sales increased less than anticipated and consumer confidence declined, reinforcing expectations that the Fed may soon implement a policy easing. “There was a sea of green across major equity markets with futures pointing to a solid start to today’s session in the local market,” analysts noted in a research report.
“Sentiment received a boost amid increasing bets the US Fed would cut again in December, following the decline in US consumer confidence and soft retail trade numbers,” the analysts stated. Fed funds futures indicate an implied 80.7 percent probability of a 25-basis-point cut at the US central bank’s upcoming meeting on December 10, a significant shift from the even odds observed just a week prior, as per reports. The yield on benchmark 10-year Treasury notes increased to 4.0037 percent and was last trading marginally above the US close of 4.002 percent after briefly dipping below the 4 percent mark on Tuesday for the first time this month. Oil prices stabilized following a decline on Tuesday as President Volodymyr Zelenskiy announced that Ukraine was prepared to move forward with a US-backed peace plan. This development could lead to the easing of Western sanctions on Moscow’s energy trade, potentially increasing supply in the market.
Brent crude futures increased by 0.3 percent to $62.68, finding stability after dropping to a five-week low on Tuesday, while European energy prices hit their lowest point in a year and a half. On Sunday, OPEC+ is convening and is expected to maintain current output levels, according to the sources. The European single currency remained stable at $1.1564, reflecting a 0.3 percent increase over the past month. The dollar increased by 0.2 percent against the yen, reaching 156.33, while the dollar index, which monitors the greenback against a selection of currencies from other significant trading partners, remained steady at 99.833. Sterling was last trading unchanged at $1.3166 following four consecutive days of gains, with the UK government’s budget set to be released later on Wednesday. Finance Minister Rachel Reeves is expected to announce new tax increases as part of efforts to uphold the confidence of financial markets amid an anticipated downgrade of Britain’s economic prospects.
The New Zealand dollar experienced a notable increase of 0.9 per cent, reaching $0.5669, following the Reserve Bank of New Zealand’s decision to lower benchmark interest rates by 25 basis points to 2.25 per cent and adjust its previous dovish guidance. Australian shares increased by 0.7 per cent, while the Australian dollar appreciated by 0.2 per cent following a faster-than-expected rise in consumer prices in October, bolstering speculation that the central bank’s easing cycle may have reached its conclusion. Spot gold was trading up 0.2 percent at $4,131.78 per ounce, while bitcoin rose 0.5 percent to $87,438.53.
