Asian stock markets exhibited mixed performances on Thursday following a historic high on Wall Street. Investors grew increasingly hopeful for U.S. Federal Reserve rate cuts after softer U.S. services data suggested a cooling economy, boosting market sentiment.
The S&P 500, Nasdaq, and Dow Jones Industrial Average all reached record levels overnight. Bitcoin, often regarded as a sentiment barometer, approached the landmark $100,000 threshold, trading at $98,200 during early Asian trading hours.
The rally in U.S. equities, driven by optimism over a more dovish Federal Reserve, carried into Thursday’s Asian trading session. U.S. markets have largely priced in an additional rate cut in 2025, and the probability of a December rate cut rose to approximately 75% over the past ten days.
Bitcoin’s steady climb, buoyed by institutional interest and approval of exchange-traded funds (ETFs) earlier this year, brought the cryptocurrency within striking distance of the symbolic $100,000 mark. Geoff Kendrick, global head of digital assets research at Standard Chartered, commented, “It’s just a number, but reaching this level underscores the industry’s institutionalisation.”
Asian Market
Japan and Hong Kong Diverge
The MSCI’s broadest index of Asia-Pacific shares outside Japan dipped slightly as losses in Hong Kong offset gains in other regions.
- Japan: The Nikkei 225 index rose 0.6% to hit a three-week high, benefiting from optimism around global markets and resilient domestic corporate earnings.
- Hong Kong: The Hang Seng Index fell 0.8%, weighed down by concerns over sluggish economic recovery and ongoing geopolitical tensions.
Australia and South Korea
Australian shares advanced, supported by gains in mining stocks as iron ore prices climbed on Chinese stimulus expectations. Meanwhile, South Korean markets remained steady despite political turbulence earlier in the week, triggered by the president’s failed attempt to impose martial law.
Wednesday’s Institute for Supply Management (ISM) report revealed a slowdown in U.S. services sector growth in November. This softer data led to a three-basis-point decline in benchmark 10-year Treasury yields, settling at 4.182%.
Federal Reserve Chair Jerome Powell, speaking at a New York Times event, acknowledged the economy’s strength but refrained from pushing back against market expectations for rate cuts. Similarly, Fed Governor Christopher Waller signaled openness to a December rate cut earlier this week.
- European Retail Sales: Expected to offer insights into consumer spending trends.
- German Factory Orders: A bellwether for the Eurozone’s industrial health.
- U.S. Employment Data: A crucial report on Friday could sway bond and equity markets.
Su-Lin Ong, chief economist at RBC Capital Markets, noted, “While U.S. data has been resilient, markets may have overestimated the scale of potential rate cuts.”
European equity futures slipped 0.3%, despite German stocks reaching record highs with a 4% weekly gain. However, retail sales data later in the day could shift market sentiment.
Forex Market Trends
The U.S. dollar tracked Treasury yields lower but remained relatively stable.
- Euro: Pressured at $1.0514 amid political uncertainty in France after the government lost a confidence vote, the first such defeat since 1962.
- Japanese Yen: Slightly firmer at 150.31 per dollar after unwinding rate hike expectations due to cautious central bank signaling.
- Australian Dollar: Struggled at $0.6420 following disappointing domestic growth data earlier this week.
Oil Prices Ahead of OPEC+ Meeting
Oil prices edged higher as traders awaited the outcome of an OPEC+ meeting later in the day. Sources suggest the group will likely extend its current production cuts to sustain price levels.
- Brent crude rose 0.2% to $72.42 per barrel.
Iron Ore and Gold
- Iron Ore: Prices remained supported by speculation around additional Chinese economic stimulus.
- Gold: Steady at $2,649 per ounce, reflecting balanced demand amid global market uncertainties.
Bitcoin’s approach to $100,000 has reignited interest in cryptocurrencies, driven by growing institutional adoption and ETF inflows. The cryptocurrency has surged since the election of Donald Trump, with expectations of a crypto-friendly administration fueling investor enthusiasm.
Kendrick explained the dynamics, highlighting the ETF approval’s role in bringing institutional credibility to the sector.
