Global markets rose sharply today as traders priced in a higher probability of the Federal Reserve cutting interest rates in December, following signals of softening momentum in the U.S. labor market.

The MSCI Asia‑Pacific index, excluding Japan, climbed 0.75%, with Hong Kong’s Hang Seng rising 0.6% and China’s CSI 300 gaining 1.1%. Japan’s Nikkei posted a modest increase, reflecting mixed investor sentiment.

Investors were encouraged by expectations that looser monetary policy could support risk assets and stimulate economic growth across the region.

Federal Reserve Governor Christopher Waller cited weakening labor data, prompting investors to raise the likelihood of a December rate cut to 85%, up from 42% a week ago.

Traders saw this as a positive signal for equities, particularly for high-growth and tech sectors that are sensitive to financing costs.

Analysts noted that a potential easing could improve credit conditions and consumer spending, which are crucial for sustaining global economic momentum.

In addition to U.S. monetary developments, investors also monitored developments in Chinese trade and manufacturing data, assessing their impact on regional supply chains.

Currency markets reflected the risk-on sentiment, with the U.S. dollar holding steady while the Japanese yen weakened toward ten-month lows.

Treasury yields softened modestly as investors anticipated a more accommodative policy stance in the months ahead.

For corporations with exposure in Asia, the rise in markets offers potential funding advantages and a supportive backdrop for growth initiatives, particularly for technology exporters and companies reliant on cross-border trade.

However, underlying uncertainties remain, including geopolitical tensions and domestic policy changes that could affect regional stability.

In conclusion, while optimism is building in the markets due to the rate-cut expectations, analysts caution that momentum is fragile and heavily dependent on upcoming economic data and central bank communications.

Companies and investors must remain alert to sudden shifts in sentiment that could reverse recent gains.

Source: Reuters.