Asian stocks climb as hopes for US rate cut ease market jitters

Asian markets mostly edged higher on Monday, lifted by renewed optimism that the U.S. Federal Reserve may move forward with another interest rate cut, easing nerves after a volatile week driven by concerns of a tech-sector bubble.

A rush of investment into artificial intelligence has pushed global equities to new heights this year, with chipmaker Nvidia recently becoming the world’s first company to surpass a $5 trillion valuation. But the rapid surge has sparked growing fears that the sector may be overheated, raising the risk of a market correction—especially as investors question how quickly massive AI spending will translate into profits.

These concerns have been amplified by doubts that the Federal Reserve will deliver a third consecutive rate cut next month, with stubborn inflation overshadowing signs of weakness in the labor market.

Sentiment improved Friday after New York Federal Reserve President John Williams said there is still “room for a further adjustment” at the central bank’s December 9–10 meeting. Following his comments, the probability of a rate cut jumped from 35 percent to around 70 percent.

This week’s release of the producer price index—one of the last major data points before the meeting—will draw extra attention, especially with other key reports delayed due to the government shutdown. IG analyst Fabien Yip noted that an unexpectedly strong PPI reading could reignite concerns about persistent inflation and reduce the Fed’s flexibility to cut rates.

After Wall Street ended a rough week with a solid rebound on Friday, Asian markets followed suit. Hong Kong and Seoul gained more than one percent, while Sydney, Singapore, Wellington, and Taipei also advanced. Shanghai and Manila slipped, and U.S. futures traded higher. Tokyo’s market was closed for a holiday.

Even with the improved mood, uncertainty continues to cloud riskier assets. Bitcoin remained near $87,000—up from a recent seven-month low but still far below the record $126,200 reached last month.