Global financial markets are witnessing an unprecedented change in attitude as investors exhibit rising optimism about changes in central bank policies. Asian stock markets have taken center stage as the leading beneficiaries of this optimism, as leading stock markets in this continent have recorded sharp increases despite prevailing uncertainties in the economy. Changes in the markets are influenced by optimism about changes in central bank policies.
Asian equities surge following Wall Street momentum
Asian stocks closed higher on Thursday, following the fourth straight gain on Wall Street due to rising hopes of a Fed rate cut in December. Japan’s Nikkei 225 index stood unchanged at 50,172.60, while stocks connected to artificial intelligence, including Kioxia Holdings, Fujikura, and Lasertec, closed lower due to mixed markets. Japan’s core inflation rate for the year remained unchanged at 2.8% in November, similar to October and above the BOJ target of 2%.
South Korea’s Kospi index lost 1.4% to 3,930.95 due to poor industrial output numbers, down 4% month-over-month in October. Chip-manufacturing output contracted 26.5% month-over-month, dragging down some of the leading stocks in this area, including LG Energy Solutions, SK Hynix, and Samsung Electronics. In spite of such factors, on the whole, regional markets remained in an expansive phase due to investors’ attention to the overall monetary policy instead of individual economy-related factors.
Chinese markets rise on stimulus hopes
Chinese stock markets also performed well in the region, due to hopes that the government will launch additional stimulus policies in order to promote economic growth. In Hong Kong, the Hang Seng Index closed down 0.2% at 25,896.33, while the Shanghai Stock Exchange added 0.2% to 3,883.46. Chinese stocks rallied, led by hopes for more government action, although gainers were limited due to turmoil in the property markets and concerns about property debts. This helped to sustain investors’ optimism about the current market rally.
Fed rate-cut optimism fuels international markets
“Everyone is sprinting towards reaching the same conclusion—the Fed will spread some holiday cheer,” Stephen Innes of SPI Asset Management wrote in one of his commentaries.
Comments from members of the Fed in recent days have contributed to renewed optimism that the Fed will unleash its action at the next calendar year-end meeting in December, and this has been greatly supportive of risk markets around the world. Even as markets continue to be influenced by developments in the area of artificial intelligence, the big spotlight remains fixed on the Fed and its views on monetary policy in the US.
Commodity markets embody the patterns of optimism
Australia’s S&P/ASX 200 index dropped 0.1% to 8,608.90, whereas Taiwan’s Taiex gained 0.9% and the BSE Sensex of India increased 0.1%. US benchmark crude oil increased 43 cents to $59.08 per barrel, whereas Brent crude increased 21 cents to $63.08 per barrel, showing improvement in demand perspectives. The US dollar appreciated to 156.34 Japanese yen from 156.31 Japanese yen, whereas the euro dropped to $1.1584 from $1.1596, showing further strength in the dollar despite an expected rate cut.
European stocks rose on Thursday in advance of the Thanksgiving holidays, adding to the positivity witnessed in the past sessions. In Wednesday’s trade before the US markets’ Thanksgiving holiday, stocks closed higher on Wall Street, with the S&P 500 rising 0.7%, the Dow rising 0.7%, and the Nasdaq composite rising 0.8%. This helped to sustain investors’ optimism about the current market rally.
Global markets are showing unusual strength as investors continue to factor in dovish or easy monetary policies in leading central banks around the world. Tightening expectations of Fed cuts and possible stimulus moves in China have helped contribute to supportive conditions for risk markets around the world. Though specific economy-related data remains mixed, it is obvious that the narrative of easing conditions is supporting optimism in markets around the world.
