Emerging Markets Are Rising: Hopes for Interest Rate Cuts

Asian Markets Continue to Rise

Asian markets started the week with gains as fresh hopes for a rate cut in the U.S. emerged. While last week’s fluctuating process was shaken by concerns over a technology bubble, it offers various opportunities for investors.

Significant investments in the artificial intelligence (AI) field throughout the year have pushed stocks higher. Last month, chip giant Nvidia reached a valuation of $5 trillion, setting an important record.

However, investors have begun to worry that these large investments in the sector may be excessive and that realizing profits may take time. This situation has raised warnings of a potential market correction.

In addition, in recent weeks, the Federal Reserve is not expected to cut rates again, as persistent high inflation overshadows weaknesses in the labor market.

Nevertheless, risk appetite strengthened last Friday after New York Fed President John Williams said he saw "room for further adjustment" at the monetary policy meeting on December 9-10. This statement increased the probability of a rate cut from 35% to 70%, boosting investors' hopes.

This week, the producer price index is expected to be released. This data will be one of the key indicators before officials come together. Other critical reports have been postponed or missed due to government shutdowns.

IG market analyst Fabien Yip stated, “The significance of the reading has increased due to the delay of the personal consumption expenditures report expected to be released on November 26. This removes an important data point from policymakers’ assessment framework.”

Yip added, “A much stronger-than-expected PPI result could strengthen concerns that inflation pressures remain entrenched and may limit the Fed’s rate-cutting capacity in December.”

The rise on Wall Street on Friday capped a challenging week in the market, with much of Asia in the spotlight as Hong Kong and Seoul rose by more than 1%. Sydney, Singapore, Wellington, and Taipei also experienced significant gains, while Shanghai and Manila pulled back. U.S. futures rose as well.

Tokyo was closed due to a holiday. However, while the overall atmosphere was observed to be somewhat calmer compared to last week, uncertainty continues to weigh on risky assets. Bitcoin is fluctuating around $87,000. After rising to $126,200 last month, Bitcoin has rebounded from its seven-month low of $80,553.

Current Market Situation

- Hong Kong - Hang Seng Index: up 1.4% at 25,568.08
- Shanghai - Composite: down 0.1% at 3,829.71
- Tokyo - Nikkei 225: Closed for holiday
- Dollar/Yen: 156.70 yen, Friday 156.39 yen
- Euro/Dollar: $1.1515, Friday $1.1519
- Pound/Dollar: $1.3096, Friday $1.3107
- Euro/Pound: 87.92 pence, Friday 87.88 pence
- West Texas Intermediate: down 0.2% at $57.93
- Brent North Sea Crude: down 0.2% at $62.44
- New York - Dow: up 1.1% at 46,245.41 (closed)
- London - FTSE 100: up 0.1% at 9,539.71 (closed)