Asian stocks trade higher amid rate cut expectations

Asian stocks were trading largely higher on Thursday, with Hong Kong leading the gains as investors worked on expectations the US Federal Reserve will cut rates next year.

Global markets have been on the front foot since the Fed’s most recent meeting when it signalled its rate-hike cycle could be nearing an end as global inflation slows.

AFP reports indicate that other than Japan, most Asian bourses were in positive territory on Thursday, with Shanghai, Seoul, Sydney, Taipei, Wellington, Jakarta, Manila, Singapore and Kuala Lumpur all rising.

“Tokyo closed down almost half a per cent, weighed by a strengthening yen, with the currency buoyed by expectations around the Fed’s monetary policy and gaining more than 1.2 per cent.

The Japanese exchanges’ performance was also hemmed by the fact that the right to claim dividends for many shares has now expired, driving down the overall market.

Hong Kong and Seoul led regional gains across Asia, with the Hang Seng closing more than 2.5 per cent up.”

On Wednesday, the Dow Jones Industrial Average led gains on Wall Street, advancing 0.3 per cent to finish at another all-time high of 37,665.52.

Europe’s main markets rose at the open on Thursday, with London, Frankfurt and Paris all starting higher.

While US inflation has slowed, it remains above the Fed’s long-term target of around two per cent, and analysts warned that consumer spending had still not bounced back to healthy levels.

US retail sales over the key holiday shopping season were up 3.1 per cent year-on-year, according to the Mastercard SpendingPulse survey, but that was markedly down from the previous year’s 7.6 per cent jump.

“This is a reflection of a more cautious consumer and less discounting from retailers due to better inventory management,” said investor Louis Navellier in a note.

“While inflation is falling, the runup from last year’s high rate has still squeezed budgets against a modest wage growth closer to four per cent.”

On the commodities front, gold continued a recent march after hitting record highs earlier this month, touching $2,088.44 per ounce in Thursday trading before retreating.

Similarly, the oil markets continue to fret over the threat of the Israel-Hamas war spilling out into an all-out regional conflict and the ongoing attacks on key Red Sea shipping lanes by Yemen’s Huthi rebels.

AFP reported on Wednesday that French shipping giant, CMA-CGM resumed some transit through the waterway, days after Danish group Maersk announced it would return as a US-led naval coalition is now policing the maritime route.

On Thursday, oil prices stabilised around that news, with both WTI and Brent futures trading within a relatively narrow band.