Risk sentiment strengthens as investors bet on a third consecutive rate reduction and eye potential new Fed leadership…
Asian equities pushed higher on Wednesday, tracking a global rally after another round of subdued US economic data bolstered expectations that the Federal Reserve will deliver yet another interest-rate cut next month.
Market optimism was further lifted by reports that Kevin Hassett, chief of the White House National Economic Council, has emerged as the frontrunner to replace Jerome Powell as Fed chair when his term ends next year. The prospect of a Trump-aligned candidate seen as favouring lower rates added fuel to the risk-on momentum, helping investors shake off recent market jitters.
Expectations of a December rate cut have accelerated this week, following comments from several Fed officials who indicated they support a third straight reduction as concerns about the labour market overshadow persistently high inflation.
A fresh batch of US data, some delayed by the recent government shutdown strengthened the case for looser monetary policy. Payroll processor ADP reported that private employers cut an average of 13,500 jobs per week in the four weeks to November 8. Meanwhile, retail sales slowed in September, rising at a weaker pace than in August and missing analyst forecasts.
Consumer sentiment also deteriorated. The Conference Board’s consumer confidence index dropped to a seven-month low, with households increasingly uneasy about job prospects and income stability ahead of the peak holiday shopping season.
While the Labor Department said wholesale inflation edged up in September, the increase matched expectations and was driven largely by higher goods prices, underscoring cost pressures faced by businesses.
Analysts noted the backlog of delayed releases created an unusual data dump.
“As stale as some of the numbers are, markets hungry for macro signals are treating them as dovish,” wrote Stephen Innes of SPI Asset Management. He added that Goldman Sachs has trimmed its estimate of third-quarter GDP growth to 3.7 per cent, reinforcing the narrative that the US economy is cooling heading into the December policy window.
Reports of Hassett’s potential nomination also pushed markets higher. Seen as a close ally of President Trump, Hassett is widely viewed as supportive of lower interest rates.
“His appointment would likely strengthen the administration’s push for easier policy,” said Rodrigo Catril of National Australia Bank.
Asia Follows Wall Street Higher
Wall Street’s major indices notched a third day of solid gains overnight, and Asian markets followed suit.
Tokyo and Seoul each rose by around 2 per cent, while Hong Kong, Shanghai, Sydney, Singapore, Taipei, and Wellington also recorded healthy advances.
The rebound comes after a period of volatility earlier in November, driven by concerns over high valuations especially in tech and growing questions about the massive investment pouring into artificial intelligence.
In corporate news, Alibaba shares fell more than 1 per cent after the Chinese e-commerce giant reported a decline in profits linked to consumer subsidies and rising costs from expanding its data-centre infrastructure for AI-related services.
Key Market Figures at 02:30 GMT
- Tokyo – Nikkei 225: UP 1.9% at 49,605.57
- Hong Kong – Hang Seng Index: UP 0.6% at 26,054.70
- Shanghai – Composite: UP 0.2% at 3,876.05
Currencies:
- Euro/Dollar: $1.1583 (up)
- Pound/Dollar: $1.3191 (up)
- Dollar/Yen: 155.82 yen (down)
- Euro/Pound: 87.81 pence (down)
Commodities:
- WTI Crude: UP 0.2% at $58.06 per barrel
- Brent Crude: UP 0.2% at $62.62 per barrel
Major Index Closes:
- New York – Dow Jones: UP 1.4% at 47,112.45
- London – FTSE 100: UP 0.8% at 9,609.53
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