Asian stocks climbed on Tuesday, driven by mounting bets on Federal Reserve interest rate cuts in 2024, as signs of cooling inflation in the U.S. boosted investor optimism. Key markets across Japan, South Korea, and Hong Kong posted gains, with the MSCI Asia-Pacific index rising 1.2%, supported by technology and consumer stocks. The easing U.S. bond yields further signaled a shift in market sentiment, bolstering equity valuations.
The Australian dollar surged nearly 0.8% against the U.S. dollar after domestic labor data exceeded expectations, reinforcing the Reserve Bank of Australia’s stance to maintain tighter monetary policy. The job creation figures showed a robust 54,000 positions added in November, far surpassing the anticipated 15,000. Analysts suggested this data could lead to a more hawkish outlook for Australia’s central bank.
Investors remain cautious, however, as geopolitical tensions and concerns over China’s economic recovery weigh on sentiment. While China’s sluggish demand dampens broader regional performance, optimism persists that U.S. monetary easing will provide some relief. The Hang Seng index climbed 0.9% despite lingering concerns over the Chinese property sector, which continues to face debt challenges.
Looking ahead, market watchers will focus on upcoming U.S. retail sales data and Federal Reserve minutes for additional clues about monetary policy direction. The rally in Asian markets reflects growing confidence that central banks globally may soon pivot to pro-growth strategies, provided inflationary pressures remain under control.
