(Dec 3): Asian stocks were set for a mostly positive open on Wednesday following modest gains on Wall Street and a rebound in cryptocurrencies that signaled pockets of returning risk appetite.
Equity-index futures for Australia and Japan advanced, though contracts for Hong Kong slipped. While the S&P 500 rose for the sixth time in seven trading days on Tuesday, most of its shares dropped. Bitcoin topped US$92,000, recovering from a bruising selloff that caught the market off guard and erased nearly US$1 billion in fresh leveraged bets. Bonds and the dollar stabilised.
The mixed backdrop highlighted the fragile sentiment heading into year-end, with investors juggling tight equity moves, renewed volatility in crypto and the outlook for the Federal Reserve’s (Fed) policy path. With only a handful of data releases left before officials meet next week, traders are treading carefully as they reassess how much momentum the global rally can sustain.
The stock market still requires a bit more broadening out before expecting an immediate push back to fresh highs, according to Mark Newton at Fundstrat Global Advisors. “I have a constructive view for December, but still believe it is likely to show a ‘back and forth’ type pattern over the next couple of weeks before turning higher to new highs.”
As traders awaited the last few economic reports before next week’s Fed decision, US President Donald Trump said he plans to announce his selection to lead the central bank in early 2026. in response, traders in US futures markets are gaming out a wide range of policy paths and favoring more interest rate cuts next year.
Trump has pressured the Fed for months to lower interest rates, and naming a successor to Jerome Powell — whose term as chair expires in May — would give the president his biggest chance yet to reshape the institution.
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After cutting interest rates by more than a percentage point, Fed officials are now wondering where to stop – and finding there’s more disagreement than ever.
In the past year or so, prescriptions for where rates should end up have diverged by the most since at least 2012, when US central bankers started publishing their estimates. That’s feeding into an unusually public split over whether to deliver another cut next week, and what comes after that.
“Nothing is going to change our view that the Fed eases next week, but it is looking more like a hawkish cut,” said Andrew Brenner at NatAlliance Securities. “We can see at least three dissents next week.”
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Money markets show traders are pricing in nearly four quarter-point Fed reductions over the next year, including one on Dec 10.
“If the Fed doesn’t deliver as many cuts, there’s some normalisation” in Treasury yields, said Jay Barry, JPMorgan’s head of global rates strategy, at a media briefing. The US economy “bends but doesn’t break,” he added.
In commodities, oil fell in a choppy trading session as traders assessed the state of the conflict between Russia and Ukraine. Vladimir Putin began talks at the Kremlin with US envoys Steve Witkoff and Jared Kushner on the latest plans aimed at ending the war. Elsewhere, silver retreated from a record high. Gold also slipped.
Uploaded by Isabelle Francis
