By Peter.
Asian equities notched modest gains Wednesday, riding the tailwinds of a resurgent Wall Street rally, though enthusiasm remained tempered as traders braced for a flurry of U.S. economic releases that could sway the Federal Reserve’s path into 2026. With a third straight rate cut widely anticipated for the Fed’s December 10 meeting, markets are in a holding pattern, eyes fixed on indicators like today’s ADP private payrolls and Friday’s pivotal PCE inflation report—the central bank’s go-to metric for price pressures. Bond yields dipped and the dollar softened amid the dovish tilt, but lingering debates within the Fed about tackling a cooling jobs market versus sticky inflation could inject some volatility.
Money markets are baking in a roughly 90% probability of a 25-basis-point trim next week, dropping the fed funds rate to 3.50%-3.75%, followed by three more through year-end 2026. Fueling the optimism: Whispers that President Trump’s economic guru Kevin Hassett—a vocal rate-cut advocate—is the leading contender to succeed Jerome Powell as Fed chair come May, potentially ushering in a more accommodative era. Yet, as NatAlliance Securities’ Andrew Brenner warns, this could morph into a “hawkish cut” if inflation data surprises to the upside.
IG’s Fabien Yip echoed the stakes: “Friday’s core PCE is the last big inflation check before the meeting—any upside could recalibrate the Fed’s balancing act between persistent prices and a softening labor scene.” Paired with personal income and spending figures, it’ll shine a light on whether consumers are holding firm amid the slowdown signals.
Adding a festive lift, the National Retail Federation’s post-mortem on Black Friday weekend delivered early holiday cheer: A staggering 202.9 million shoppers turned out over the five days from Thanksgiving to Cyber Monday—smashing last year’s 197 million and the prior record of 200.4 million from 2023. That’s three-quarters of U.S. adults hitting stores or apps, averaging $340 apiece on gifts, decor, and experiences like concerts (topping the list at 44% of buys), followed by clothing (41%) and toys/games (31%). Online surged 9% to 134.9 million participants, while in-store held steady at 129.5 million—up 3%—with Black Friday still reigning supreme (80.3 million in bricks-and-mortar, 85.7 million digital). NRF now eyes a historic $1 trillion-plus in November-December sales, up 3.7%-4.2% from 2024, as deal-hunting consumers shrug off tariff jitters (85% expect price hikes from Trump’s policies).
Wall Street’s big three closed green for the session, with the Dow up 0.4% at 47,474.46, setting a positive tone across the Pacific. Tokyo’s Nikkei soared 1.1% to 49,864.68, boosted by tech rebounds and softer yen at 155.71 (down from 155.86). Seoul’s Kospi mirrored the vibe with over 1% gains, while Sydney, Singapore, Wellington, Taipei, and Jakarta all ticked higher—Seoul up a robust 1.81% to 3,991. MSCI’s Asia-Pacific ex-Japan index edged 0.3% firmer.
Not all green: Hong Kong’s Hang Seng dipped 1.3% to 25,760.73, Shanghai’s Composite shed 0.5% to 3,878 amid policy-watch caution ahead of China’s key meetings, Mumbai, Bangkok, and Manila also closed lower. In Europe, London opened flat-down 0.1% at 9,694.82, but Paris and Frankfurt climbed modestly.
Crypto clawed back ground, with Bitcoin rebounding above $90,000—hitting $92,877 intraday before settling around $92,076, up over 8% on the day—to erase much of the week’s 10% skid. The surge followed Vanguard’s surprise ETF pivot, sparking a high-stakes rally, though sentiment stays fragile after November’s plunge to $80,550 from October’s $126,250 peak. Liquidations topped $1 billion amid the volatility.
Emerging market currencies felt the pinch: India’s rupee weakened beyond 90 per dollar for the first time, closing at 90.23—extending a 6.52% yearly slide—as stalled U.S. trade talks, foreign outflows, and sparse RBI interventions exacerbated supply-demand imbalances. HDFC’s Dilip Parmar pinned it on “imbalance first and foremost,” with trade uncertainties fanning the flames; SAMCO’s Raj Gaikar added that defending levels now feels “costly and counterproductive” given sub-expectation inflation, prioritizing growth over reserves.
Oil edged up on supply concerns: West Texas Intermediate rose 0.5% to $58.95/barrel, Brent North Sea added 0.5% to $62.74. Euro climbed to $1.1643 (from $1.1622), pound to $1.3242 (from $1.3209), while euro/pound slipped to 87.92 pence.
As the week unfolds, the ADP jobs print could tip the scales—weakness might cement the cut, strength could spark hawkish pushback. For now, it’s a tale of resilient shoppers and rate-watch nerves, with Asia’s steady start hinting at broader risk-on vibes if U.S. data cooperates.
