(Nov 25): Asian stocks rose for a second day on Tuesday, tracking technology-led gains on Wall Street as confidence grew over a potential US Federal Reserve (Fed) interest-rate cut in December.
MSCI’s regional equities gauge advanced as much as 0.8%. Shares in Hong Kong and China gained after Presidents Donald Trump and Xi Jinping held their first talks since agreeing to a tariff truce last month. Stocks in Japan also rose on their return from a holiday.
US shares climbed on Monday as tech stocks rebounded after a three-week slump, with traders turning focus to a wave of economic data in the coming days. In extended trading, Alphabet Inc shares rose 2.6% and Nvidia Corp fell 1.5% after The Information reported that Meta Platforms Inc is in talks to spend billions of dollars to use Google’s artificial intelligence (AI)-focused chips.
Fed governor Christopher Waller signalled support for a rate cut next month, sparking renewed optimism following a choppy week for equities marked by concerns over stretched AI valuations and policy uncertainty. Some investors now see this month’s pullback as setting the stage for a December rally. Treasury yields fell on Monday.
“Many of November’s fears about AI and a cratering job market have ended up not coming to fruition,” said David Laut, the chief investment officer of Kerux Financial. “That suggests that we are seeing a traditional market pullback in recent weeks and not the start of a deeper correction.”
See also: Asian stocks poised for cautiously upbeat open
Waller’s remarks echoed those of other Fed officials, including San Francisco Fed president Mary Daly, who also voiced support for a December rate cut in a Monday interview. New York Fed president John Williams similarly moved markets last Friday by noting that a near-term cut remains on the table.
There has also been no effort by the Fed leadership to “clarify” market interpretation of Williams’ comments last Friday, Evercore ISI’s Krishna Guha and Marco Casiraghi wrote in a note published on Monday.
“They were likely approved by Powell and signal the leadership expects to push through a December rate cut,” they wrote.
See also: Asian stocks set to fall following volatile US session
Treasuries held their gains on Tuesday after yields on the benchmark 10-year declined four basis points to 4.02% in the prior session. Money markets are now pricing in a roughly 90% chance of a cut at the Fed’s upcoming December meeting, following weeks of shifting expectations.
Gold fluctuated following a 1.8% jump in the prior session. Lower rates typically make non-yielding bullion more appealing to investors.
In other corners of the market, bitcoin continued its volatile trading, edging lower after gains in the previous two sessions. Oil steadied as investors tracked a risk-on mood in wider financial markets, which countered the impact of progress in peace talks over Ukraine that could pave the way for increased crude supplies.
Ahead of Thanksgiving and Black Friday, Tuesday will bring new data for investors to assess the health of the US economy. September retail figures are expected to show a moderation as consumers remain squeezed by high prices. Dell Technologies Inc and HP Inc are due to report earnings, while in Asia Alibaba Group Holding Ltd will release results.
Other data due this week include the producer price index and durable goods orders for September.
Jobless claims on Wednesday, covering the November survey week, will take on added importance as the Fed leans on alternative indicators in the absence of payroll figures.
“There are increasing signs that the economy remains sluggish, which will put additional emphasis on the retail sales release this week, although once more the data will be slightly historic,” said Richard Hunter, the head of markets at Interactive Investor. “There will be some hopes that the recently guarded sentiment will at least temporarily be erased.”
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Corporate highlights:
- A pill version of Novo Nordisk A/S’ Ozempic failed to slow the progression of Alzheimer’s disease in a pair of long-shot studies that aimed to open up a new use for blockbuster obesity drugs.
- Anthropic PBC is rolling out a new version of its most powerful AI model that is designed to be better at automating coding and office tasks, part of an effort to compete with OpenAI and Alphabet Inc’s Google for business customers.
- Zoom Communications Inc reported quarterly revenue that topped analysts’ estimates, a sign of strength for the software maker’s expanded suite of business tools.
- Amazon.com Inc says it will spend as much as US$50 billion ($65.21 billion) expanding its capacity to provide AI and high-performance computing services to US government entities.
- Syngenta Group is considering an initial public offering in Hong Kong, according to people familiar with the matter. The Chinese-owned agricultural technology company is holding preliminary talks with financial advisers and may list in Hong Kong next year.
- Apple Inc has eliminated dozens of sales roles in a bid to streamline the way it offers products to businesses, schools and governments, marking a rare lay-off for the iPhone maker.
- Mainland Chinese investors are increasing their stakes in Alibaba Group Holding Ltd ahead of fiscal second-quarter earnings, betting that the strong launch of its AI tool Qwen will help fuel future growth.
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 10.47am Tokyo time on Tuesday
- Japan’s Topix rose 0.1%; Nikkei rose 0.6%
- Australia’s S&P/ASX 200 fell 0.2%
- Hong Kong’s Hang Seng rose 0.8%
- The Shanghai Composite rose 0.5%
- Euro Stoxx 50 futures fell 0.4%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1526
- The Japanese yen rose 0.1% to 156.66 per dollar
- The offshore yuan was little changed at 7.0994 per dollar
Cryptocurrencies
- Bitcoin fell 0.9% to US$87,923.87
- Ether fell 0.8% to US$2,934.01
Bonds
- The yield on 10-year Treasuries advanced one basis point to 4.03%
- Australia’s 10-year yield declined one basis point to 4.43%
Commodities
- West Texas Intermediate crude fell 0.2% to US$58.72 a barrel
- Spot gold was little changed
Uploaded by Tham Yek Lee
