Asian markets experienced a mostly positive trading day on Tuesday, buoyed by a significant rally in U.S. stocks driven by renewed hopes of potential interest rate cuts by the Federal Reserve. The gains were somewhat tempered, however, as U.S. futures hinted at a slight downturn and global oil prices also saw a decrease.
Tokyo’s Nikkei 225 index opened after a holiday break, remaining largely flat at 48,628.85. The performance of the index was notably impacted by a sharp decline in shares of technology giant SoftBank, which fell 10.3%. Concerns arose regarding the viability of SoftBank’s hefty investments in OpenAI, particularly in light of Google’s recent launch of its next-generation Gemini artificial intelligence model.
In South Korea, the Kospi index gained 0.3% to reach 3,859.12, while Taiwan’s Taiex saw a notable increase of 1.5%. Chinese markets also recorded advancements, with Hong Kong’s Hang Seng index climbing 0.4% to 25,821.47 and the Shanghai Composite index jumping 0.9% to 3,872.45. E-commerce leader Alibaba, which was set to announce its earnings later in the day, enjoyed a 1.6% rise in share value.
Australia’s S&P/ASX index saw a marginal recovery, edging up 0.1% to close at 8,537.00. In the U.S., markets are preparing for a shortened trading week due to the Thanksgiving holiday; Wall Street will be closed on Thursday, leading into the anticipation of Black Friday and Cyber Monday shopping events.
The recent trading day in U.S. markets on Monday was characterized by substantial gains. The S&P 500 surged by 1.5% to close at 6,705.12, marking one of its best performances since summer. The Dow Jones Industrial Average rose 0.4% to finish at 46,448.27, while the Nasdaq composite leaped 2.7% to 22,872.01. This rally was fueled by optimism regarding a possible interest rate cut from the Federal Reserve during its next meeting in December—a move that could potentially stimulate economic growth and bolster investment prices.
Particular strength was noted among stocks influenced by the burgeoning artificial intelligence sector. Alphabet, bolstered by favorable reception for its new Gemini AI model, jumped 6.3%, contributing significantly to the S&P 500’s surge. Nvidia shares also reflected growth, rising 2.1%.
The upward trajectory in U.S. markets followed a period marked by volatility and uncertainty regarding the Federal Reserve’s monetary policy direction. The fluctuations have been a significant test for investors, echoing tumultuous times seen since an April sell-off triggered by unexpected trade tariffs.
Despite prevailing market fears, the S&P 500 remains within 2.7% of its record high achieved in the previous month. The coming days present additional challenges, particularly with a key inflation report on wholesale prices set for release. Economists anticipate a 2.6% year-over-year rise, consistent with August figures. A higher-than-expected result could discourage the Fed from implementing the proposed rate cut, especially given inflation’s persistent presence above the 2% target.
Market participants are currently pricing in an approximately 85% chance that the Fed will reduce rates next month, an increase from earlier in the week, highlighting shifting sentiments among traders.
In early trading on Tuesday, U.S. benchmark crude oil prices dipped by 25 cents to $58.59 per barrel, with the international Brent crude standard declining by 30 cents to $62.42 per barrel. The U.S. dollar weakened against the Japanese yen, falling to 156.70, while it also slipped slightly against the euro at $1.1517. Bitcoin experienced a drop of 1.1%, trading at $88,100, a sharp decline from nearly $125,000 just a month ago.
