Global stocks began the week on a positive note, driven by growing expectations of a Federal Reserve rate cut in December. Despite policymakers’ division on the matter, investors took heart from the possibility of a rate reduction, which has been fueled by recent comments from New York Fed boss John Williams. He suggested that there is still “room for a further adjustment” at the bank’s December 9-10 policy meeting.
The likelihood of a rate cut has increased to 57%, up from less than 30% a week ago, according to Fed funds futures. This development has boosted market sentiment, with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 0.4% and South Korea’s tech-heavy Kospi index gaining 0.7%. Nasdaq futures and S&P 500 futures also rose, by 0.64% and 0.45%, respectively.
The release of US retail sales and producer prices data later in the week is expected to provide further insight into the state of the economy. British finance minister Rachel Reeves is also set to unveil her highly anticipated budget, which may impact market trends. The yen, meanwhile, fell 0.2% to 156.72 per dollar, remaining near a 10-month trough.
Asian markets mostly rose, with Hong Kong and Seoul jumping over 1% and Sydney, Singapore, Wellington, and Taipei also experiencing gains. However, Shanghai and Manila retreated, while Tokyo was closed for a holiday. The mood in the market remains cautious, with uncertainty weighing on riskier assets, including bitcoin, which is hovering around $87,000.
The recent surge in tech shares, fueled by the AI boom, has led to concerns about a possible market correction. Investors have grown fearful that the vast sums pumped into the sector may have been overdone, and it may take time to see profits realized. The Federal Reserve’s decision on interest rates will be closely watched, as it may impact the trajectory of the market.
Key figures at 0230 GMT included the Hang Seng Index rising 1.4% to 25,568.08, while the Shanghai Composite fell 0.1% to 3,829.71. The dollar-yen exchange rate was up at 156.70 yen, and the euro-dollar exchange rate was down at $1.1515. West Texas Intermediate crude oil was down 0.2% at $57.93 per barrel, while Brent North Sea crude was also down 0.2% at $62.44 per barrel.