Asia report: Markets mixed as investors mull interest rates

(Sharecast News) - Asia-Pacific markets traded mixed on Monday as investors weighed the prospect of a Federal Reserve rate cut following comments from New York Fed president John Williams. Williams said on Friday that a third cut this year was possible, arguing that labour market weakness posed a greater risk to the US economy than inflation.

The Fed's final meeting of 2025 is scheduled for 9-10 December, with the target rate currently at 3.75% to 4%.

Fed funds futures indicated around a 70% chance of a quarter-point reduction, up from about 44% earlier in November.

Patrick Munnelly, market strategy partner at TickMill, noted that "stocks climbed higher on Friday as traders grew more optimistic about the possibility of the Federal Reserve lowering interest rates next month," pointing out that "futures tied to the S&P 500 Index saw a 0.6% boost after the index wrapped up a volatile week on a positive note."

He added that "this upward trend extended into Asian markets, where the MSCI regional stock index gained 0.7%."

The shift in expectations followed a broad selloff across Asian markets last week as traders unwound positions in major technology names including SoftBank, Samsung Electronics and Baidu.

Markets mixed with Tokyo closed for holiday

Japan's markets were closed for the Labor Thanksgiving Day holiday.

Munnelly said the session was "subdued by Japan's public holiday on Monday, which meant no cash trading in Treasuries."

Mainland Chinese equities made modest gains, with the Shanghai Composite up 0.05% at 3,836.77 and the Shenzhen Component rising 0.37% to 12,585.08.

Technology and defence-linked names supported sentiment, with Guosheng Shian Technology climbing 10.07%, Beijing Aerospace Changfeng up 10.03% and China Marine Information Electronics advancing 10.02%.

Regional sentiment was also influenced by geopolitics after Munnelly highlighted that "tensions between China and Japan flared once again, with China addressing a letter to the United Nations in response to ongoing disputes," and that Japan's defence minister had visited a military base near Taiwan "confirming that plans to deploy missiles to the location were progressing as scheduled."

Hong Kong outperformed the region, with the Hang Seng Index gaining 1.97% to 25,716.50.

Kuaishou Technology rose 7.11%, while NetEase added 5.87% and Hansoh Pharmaceutical Group increased 5.29%.

Munnelly noted that Hong Kong had recently seen sharp gains, writing that "Hong Kong stocks surged by an impressive 4%, fuelled by Alibaba's main AI app surpassing 10 million downloads within a week of its relaunch."

South Korea's Kospi slipped 0.19% to 3,846.06 as weakness in smaller industrial and chemical names dragged on the market.

Manho Rope & Wire fell 20.6%, SG dropped 13.74% and Samyang Holdings declined 10.03%.

Australia's S&P/ASX 200 rose 1.29% to 8,525.10, lifted by corporate activity.

Qube Holdings surged 19.41% after Macquarie Asset Management made an AUD 11.6bn offer to acquire the logistics group.

Reece gained 12.66% and Sims Metal Management climbed 8.02%.

Across the Tasman Sea, New Zealand's S&P/NZX 50 added 0.6% to 13,499.85, supported by gains in Eroad, up 9.43%, Pacific Edge, up 3.43%, and Serko, up 3.17%.

Munnelly noted that the Reserve Bank of New Zealand was "expected to cut its rate by 25bps to 2.25% on Wednesday," a move in focus for regional investors.

Dollar strengthens slightly as oil prices slip

In currencies, the dollar strengthened slightly, rising 0.22% against the yen to JPY 156.75, 0.08% on the Aussie to AUD 1.5504, and 0.12% against the Kiwi to NZD 1.7839.

Oil prices edged lower, with Brent crude futures last down 0.56% on ICE at $62.21 per barrel, and the NYMEX quote for West Texas Intermediate 0.62% lower at $57.70.

Munnelly added that the global backdrop remained fluid, with US data releases and the Thanksgiving holiday expected to "reduce overall market liquidity" later in the week.

Reporting by Josh White for Sharecast.com.