(Nov 27): Global equities were close to erasing their November losses as rising bets for US Federal Reserve (Fed) interest-rate cuts revived markets after a sell-off sparked by worries over frothy artificial intelligence (AI) valuations.
The MSCI All Country World Index climbed for a fifth straight session on Thursday, cutting its November drop to just 0.5%. That follows seven consecutive months of gains. Asian stocks, which have enjoyed a similar run, are down 1.8% so far in November.
As sentiment improved, bitcoin on Wednesday jumped above US$90,000 ($116,647) for the first time in almost a week. It rose further on Thursday. Gold, which typically benefits when rates are cut, was poised for a fourth consecutive month of gains. A Bloomberg gauge of the dollar was on course for its third monthly decline in four.
The moves tracked firming expectations for an easing by the Fed, with money markets pricing in a roughly 80% chance of a quarter-point rate cut next month and three more by the end of 2026. A week ago, traders expected only three cuts in total.
The cross-asset action signals cautious optimism across global markets after concerns over tech valuations hammered equities earlier in the month. Sentiment has also been supported by the prospect of a pro–rate-cut official becoming the next US central bank chief. The Fed will announce its policy decision in the second week of December.
“The uncertainty surrounding the event is subsiding,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note to clients.
See also: Asian stocks extend gains on Fed rate-cut bets
Meanwhile, the release of the US central bank’s Beige Book showed US employment declined slightly and prices rose moderately, according to the survey of regional business contacts. Spending declined further, except among higher-end shoppers. Also, initial jobless claims fell slightly, defying expectations for a modest increase.
A four-day rally in Treasuries stalled on Wednesday, with the 10-year yield at 4%, as fresh US labour market data came in stronger than expected.
See also: Wall Street’s macro traders eye their biggest haul in 16 years
The US data “reinforced the notion that there are crosscurrents and mixed performance in the real economy”, said Ian Lyngen at BMO Capital Markets. There is nothing within the reports that will derail the Fed from cutting by 25 basis points on Dec 10, he said.
Expectations for a rate cut have strengthened after it emerged that White House National Economic Council director Kevin Hassett is the leading contender for the next Fed chair — a choice investors see aligning with US President Donald Trump’s push for lower rates.
In Japan, Prime Minister Sanae Takaichi’s government plans to issue more bonds to fund its economic package, according to people familiar with the matter.
Elsewhere, shares and dollar notes of China Vanke Co slid after it proposed delaying repayment on a local bond for the first time, while Hong Kong property group New World Development Co received additional bondholder support in its debt swap plan, a filing showed.
In the commodities market, oil edged lower as investors tracked US-led efforts to end the war in Ukraine, while looking ahead to an Opec+ gathering this weekend.
Earlier on Wednesday, the pound and gilts gained as Chancellor of the Exchequer Rachel Reeves expanded her fiscal buffer to £22 billion (US$29 billion or RM120.47 billion) in her latest budget. She funded the increase with £29.8 billion in new taxes, including levies on gambling and prime real estate.
Some of the main moves in markets:
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Stocks
- S&P 500 futures were little changed as of 10.32am Tokyo time on Thursday
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 rose 0.3%
- Hong Kong’s Hang Seng fell 0.1%
- The Shanghai Composite was little changed
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.1% to US$1.1608
- The Japanese yen rose 0.5% to 155.74 per dollar
- The offshore yuan was little changed at 7.0720 per dollar
Cryptocurrencies
- Bitcoin rose 0.5% to US$90,680.81
- Ether rose 0.3% to US$3,032.05
Bonds
- The yield on 10-year Treasuries was unchanged at 3.99%
- Australia’s 10-year yield declined six basis points to 4.47%
Commodities
- West Texas Intermediate crude fell 0.5% to US$58.33 a barrel
- Spot gold fell 0.2% to US$4,155.83 an ounce
Uploaded by Tham Yek Lee
