In a notable surge, Asia-Pacific equities experienced gains on Wednesday, driven by increasing confidence in a global peak in interest rates among major central banks. Bond yields continued their decline, with Japanese government bond yields hitting the lowest since mid-August and U.S. Treasury yields hovering near a three-month trough.
Amidst this, crude oil marked a nearly five-month low, while gold remained steady after stepping back from an all-time high. Bitcoin traded just below $44,000 following its recent ascent to a 20-month peak. The U.S. 10-year Treasury yields held steady at approximately 4.186%, reinforcing that the Federal Reserve has concluded its rate-hiking cycle. The probability of a first-rate cut by March now stands at around 64%, per the CME Group’s FedWatch tool.
Lower borrowing costs propelled equity markets, particularly benefiting major tech stocks. Japan’s Nikkei surged by 1.6%, rebounding from a mid-November low, Australia’s stock benchmark jumped 1.4%, and South Korea’s KOSPI added 0.56%. U.S. stock futures indicated a positive trend, with the Nasdaq, led by tech-heavy companies, up 0.4%. The S&P 500 futures also rose by 0.26%. Chinese equities underperformed, influenced by fragility in sentiment following Moody’s downgrade warning on China’s credit rating. Despite this, Hong Kong’s Hang Seng rose by 0.41%, driven mainly by a tech rally.
With global markets essentially anticipating a cut from the Fed, dovish signals from European Central Bank officials and the Reserve Bank of Australia’s decision to maintain steady policy have fueled expectations of a peak in rates worldwide.
Amid these developments, the U.S. dollar rebounded from last week’s nearly four-month low against major peers. The U.S. dollar index remained steady at around 103.95 on Wednesday. After reaching a record $2,135.40 on Monday, Gold remained flat just below $2,020. Bitcoin, buoyed by expectations of a Fed rate cut and speculation on the approval of exchange-traded spot bitcoin funds, held steady at around $43,850.
Crude oil faced further decline on Wednesday due to a worsening demand outlook from China and doubts about the impact of OPEC cuts. Brent crude futures fell 0.1% to $77.12 a barrel, while U.S. WTI crude futures were down 0.2% at $72.19 a barrel, closing at their lowest since July 6 in the previous session.
