SYDNEY, Nov 25 (Reuters) – Asian share markets rallied on Tuesday as hopes grew the Federal Reserve will deliver a December interest rate cut, while investors piled into global technology stocks shrugging off concerns the sector was becoming overheated.
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“Nice to see widespread cross-asset class green on the screens this morning as volatility eases a notch and the Fed put comes into play again,” Charlie Aitken, Regal Partners’ investment director, said in a note.
“This is classic bull equity market behaviour. A short, sharp pullback in stocks and sectors that have led the market, a flush out of the over-leveraged at the bottom, and a recovery starts, led by the most beaten-up growth stocks and cyclicals.”
Markets are pricing in an 85.1% chance of a cut of 25 basis points at the December meeting, according to CME’s FedWatch Tool, up from 42.4% a week ago. The U.S central bank will meet on December 9 and 10.
San Francisco Federal Reserve Bank President Mary Daly told the Wall Street Journal she supported lowering interest rates at the central bank’s meeting next month as she sees a deterioration in the job market.
In the Asian trading session, the yield on benchmark 10-year Treasury notes was flat at 4.0344%. The two-year yield , which rises with traders’ expectations of a higher Fed funds rate, was steady at 3.4872% in Asian hours after dropping 2.5 basis points in the previous session.
The sudden shift in rate cut wagers have weighed slightly on the dollar. The euro last bought $1.1522 after eking out small gains overnight. The dollar index was at 100.2 in early trading.
Despite the dollar’s slight weakness this week, the Japanese yen has remained fragile, trading at 156.95 per dollar in early Asian hours, not far from the 10-month low of 157.90 it touched last week.
An ongoing row between Tokyo and Beijing over a comment by Japan’s Prime Minister Sanae Takaichi earlier in November that a Chinese attack on Taiwan could trigger a Japanese military response remains in focus.
Takaichi and U.S. President Donald Trump spoke on Tuesday, following his call on Monday with Chinese President Xi Jinping. She said Trump explained U.S.-China relations to her.
The session marked the Nasdaq’s biggest daily percentage rise since May 12 and the best two-day rise since November 2024.
U.S stock and bond markets will be closed on Thursday for the Thanksgiving holiday and will trade for half a day on Friday.
In commodities, Brent crude futures were down 0.2% at $63.16 a barrel, while U.S. crude futures were also off 0.2% at $58.70 per barrel.
Spot gold was 0.2% lower at $4,130 an ounce.
Reporting by Scott Murdoch; Editing by Sonali Paul
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