Asian markets experienced a mostly positive day on Wednesday, with many indices following the lead of Wall Street’s resumed rally. However, gains were limited as investors await crucial US data releases ahead of the Federal Reserve’s meeting next week. The likelihood of a third consecutive interest rate cut has already been factored into trading, resulting in softer market activity.
Key data releases this week, including the private jobs report from ADP and the personal consumption expenditure (PCE) index, will play a significant role in the Fed’s decision-making process. The PCE index, in particular, is the Fed’s preferred measure of inflation. Money markets currently predict a 90% chance of a rate cut on December 10, with three more cuts forecast by the end of next year.
Reports suggesting that President Donald Trump’s economic adviser, Kevin Hassett, may take the helm at the Fed when Jerome Powell’s term ends in May have also contributed to the optimism. However, some observers note that there may still be differences among Fed policymakers regarding the need to address the soft labor market and stubbornly high inflation.
The release of personal income and spending data alongside the PCE index will provide additional insight into consumer resilience. The National Retail Federation’s upbeat assessment of the “Black Friday” holiday shopping weekend, which saw a record 202.9 million consumers shop over the five-day period, has also boosted sentiment.
Most Asian markets rose, with Tokyo and Seoul leading the way, while Hong Kong, Shanghai, and Mumbai fell. London opened in the red, while Paris and Frankfurt rose. Bitcoin recovered to above $90,000 after a significant decline earlier in the week.
The Indian rupee weakened past 90 per dollar for the first time, extending its decline throughout the year. Analysts attribute this to an imbalance of demand and supply, foreign fund outflows, and trade deal uncertainties. The Reserve Bank of India’s approach to defending the rupee has been sporadic, with some analysts believing that the central bank is allowing greater currency flexibility.
The upcoming data releases will be closely watched, as they may impact the Fed’s policy stance and influence market sentiment. As the global economy continues to navigate uncertainty, investors will be looking for signs of stability and growth. The next few days will be crucial in determining the direction of the markets, with the Fed’s meeting next week being a key event.