Asian Stocks Rise as Investors Bet on US Interest Rate Cut
Asian markets continued their upward trend on Thursday, extending the global rally that began earlier in the week. The surge is largely driven by expectations of a third consecutive US interest rate cut next month. Recent concerns over inflated valuations have taken a backseat, and confidence is flowing through trading floors, boosting riskier assets, including bitcoin.
Comments from Federal Reserve officials and a string of weak jobs reports have reinforced expectations of another rate cut at the December policy meeting. The central bank’s “beige book” report highlighted a growing divergence in consumption, with lower-income populations pulling back on spending. However, higher-end retail spending remained resilient.
Traders were unfazed by data showing a drop in jobless claims, which contradicted forecasts of a small rise. Markets are now pricing in an 80% chance of a rate cut on December 10 and three more next year. This is a significant shift from the previously expected three reductions.
Wall Street’s main indexes rose for the fourth straight day on Wednesday, with markets closed on Thursday for Thanksgiving. Asian markets followed suit, with Tokyo, Hong Kong, Shanghai, and Seoul all advancing. The global gains come after markets took a hit earlier in the month due to concerns over the tech-led surge and the vast sums invested in the AI sector.
Analysts point to a wider range of firms driving the latest rally, with smaller-cap companies benefiting from lower borrowing costs. The prospect of lower rates has overshadowed concerns about elevated inflation, with the Fed focusing on the jobs market.
Bitcoin, which recently plunged to a seven-month low, broke back above $90,000 as risk appetite returned. However, it remains off its record high. In corporate news, Tokyo-listed beer giant Asahi fell after announcing a delay in its financial results due to a cyberattack.
South Korea’s largest crypto exchange, Upbit, is set to be acquired by tech giant Naver Financial in a deal valued at over $13 billion. The acquisition is pending board approval. Upbit is the world’s fourth-largest crypto exchange in terms of trading volume.
Key figures at 0215 GMT included the Nikkei 225 up 1.3% at 50,203.38, the Hang Seng Index up 0.1% at 25,944.71, and the Shanghai Composite up 0.4% at 3,879.12. The euro and pound rose against the dollar, while West Texas Intermediate crude oil fell 0.6% to $58.33 per barrel.
