Emerging Markets Rise on Hopes of Fed Rate Cuts

Asian stock markets rose with renewed hopes for a possible interest rate cut in the United States. The positive development brought a degree of calm to markets that had experienced a volatile course over past week amid concerns about a technology bubble.

Investments in artificial intelligence have significantly boosted stock values this year, allowing many companies to reach record highs. Notably, microchip giant Nvidia drew attention last month by exceeding $5 trillion for the first time.

However, investors began to express concerns that the enormous amounts of money flowing into the sector may be excessive and that realizing profits could take time. This situation has led to warnings about a potential market correction.

In recent weeks, decreasing expectations that the Federal Reserve would cut rates for the third time next month have increased uncertainty in the markets. High inflation continues to overshadow weaknesses in the labor market.

However, remarks made by New York Fed President John Williams on Friday revived the market's appetite for risk. Williams stated that he sees 'more room for adjustment' regarding the interest rate in the meeting scheduled for December 9-10. With these comments, the likelihood of a rate cut rose from 35% to approximately 70%.

This week, the market's focus will be on the release of the producer price index. This data is significant as it is one of the last major metrics before the authorities' meetings. IG market analyst Fabien Yip said, 'The importance of this reading has increased due to the postponement of the October personal consumption expenditures report.'

'A much stronger-than-expected result in the producer price index could reinforce concerns that inflation pressures remain entrenched and may restrict the Federal Reserve’s capacity to cut rates in December,' he added.

Following the rally on Wall Street on Friday, Asian markets started positively. Hong Kong and Seoul gained more than 1%, while Sydney, Singapore, Wellington, and Taipei also recorded gains. On the other hand, Shanghai and Manila pulled back slightly. Futures in the United States rose.

Tokyo was closed due to a holiday.

Still, while the atmosphere is somewhat calmer than last week, uncertainty continues to affect risky assets. Bitcoin is trading at around $87,000. Although this is an increase from its seven-month low of $80,553, it is still well below the $126,200 it reached last month.

- Around 0230 GMT key data -

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