Emerging Markets Rise on Hopes of U.S. Rate Cuts

Asian stock markets rose with new hopes for a possible interest rate cut in the United States. The positive development brought some calm to the markets, which had been volatile over the past week due to concerns about a technology bubble.

Investments in the field of artificial intelligence have significantly boosted stock values this year, allowing many companies to break records. Notably, microchip giant Nvidia had drawn attention last month by surpassing $5 trillion for the first time.

However, investors have begun to worry that the enormous amount of money flowing into the sector is excessive and that the realization of profits may take time. This has led to warnings about a potential market correction.

In recent weeks, the decrease in expectations that the Federal Reserve will cut interest rates for the third time next month has increased uncertainty in the markets. High inflation continues to outpace weakness in the labor market.

However, John Williams, President of the New York Fed, renewed market risk appetite with his statements on Friday. Williams indicated that he sees 'more adjustment possibilities' for interest rates at the meeting scheduled for December 9-10. Following these statements, the probability of an interest rate cut rose from 35% to approximately 70%.

This week, the focus of the markets will be the announcement of the producer price index. This data is significant as it is one of the last crucial figures before the authorities gather. Fabien Yip, a market analyst at IG, said, 'The importance of this reading has increased due to the postponement of the October personal consumption expenditures report.'

He added, 'A much stronger-than-expected result in the producer price index could reinforce concerns that inflation pressures are still entrenched and could limit the Federal Reserve’s capacity to cut interest rates in December.'

Following the rally on Wall Street on Friday, Asian markets started positively. Hong Kong and Seoul saw gains of over 1%, while Sydney, Singapore, Wellington, and Taipei also recorded increases. On the other hand, Shanghai and Manila slightly retreated. Futures in the United States rose.

Tokyo was closed due to a holiday.

Nonetheless, while the atmosphere is somewhat calmer than last week, uncertainty still affects risky assets. Bitcoin is trading at around $87,000. Although this is an increase from the seven-month low of $80,553, it is still significantly lower than the $126,200 it reached last month.

- Main data around 0230 GMT -

• Hong Kong - Hang Seng Index: Up 1.4% to 25,568.08
• Shanghai - Composite Index: Down 0.1% to 3,829.71
• Tokyo - Nikkei 225: Closed due to holiday
• Dollar/Yen: Up 0.2% to 156.70 yen
• Euro/Dollar: Down 0.03% to 1.1515 dollars
• Pound/Dollar: Down 0.08% to 1.3096 dollars
• Euro/Pound: Up 0.04% to 87.92 pence
• West Texas Intermediate: Down 0.2% to $57.93/barrel
• Brent North Sea Crude: Down 0.2% to $62.44/barrel
• New York - Dow: Up 1.1% to 46,245.41 (close)
• London - FTSE 100: Up 0.1% to 9,539.71 (close)