Asian Markets Mixed as US Rally Sparks Rate Hopes

Asian stock markets showed a patchy performance on Tuesday as investors reacted to Monday’s surge in US equities, driven by expectations that the Federal Reserve may cut interest rates soon.

Tokyo’s Nikkei 225 barely moved, inching up less than 0.1% to 48,644.92 after reopening from a holiday. South Korea’s Kospi hovered around 3,848.00, remaining almost flat, while Taiwan’s Taiex gained a notable 1.4%.

Chinese markets advanced steadily, with Hong Kong’s Hang Seng climbing 0.6% to 25,875.36 and Shanghai Composite rising 1.1% to 3,880.22. E-commerce giant Alibaba saw a 2.4% gain ahead of its earnings report scheduled later in the day. Australia’s S&P/ASX, however, slipped 0.2% to 8,510.30.

In the US, markets rallied strongly on Monday despite a shortened trading week for Thanksgiving. The S&P 500 surged 1.5% to 6,705.12, the Dow Jones rose 0.4% to 46,448.27, and the Nasdaq jumped 2.7% to 22,872.01. Technology and AI-related stocks led the charge, with Alphabet climbing 6.3% after excitement over its Gemini AI model and Nvidia rising 2.1%.

Investors are now closely watching the Fed’s next move, as markets price in an 85% chance of a rate cut in December, up from 71% last Friday. A key factor in this decision will be upcoming US wholesale inflation data, expected to show a 2.6% annual increase. A higher-than-expected reading could dampen hopes of another cut.

Commodity markets also reflected caution. US crude oil fell 28 cents to $58.56 per barrel, while Brent crude declined 33 cents to $62.39 per barrel. Currency markets were steady, with the dollar slightly lower at 156.81 yen, and the euro dipping to $1.1517. Bitcoin retreated 1.1% to $88,200, down from nearly $125,000 last month.

Global investors now face a delicate balancing act between optimism for looser US monetary policy and caution over inflation pressures, all while tracking the volatile momentum in technology and AI-driven markets.