Financial markets across Asia witnessed a notable upswing on Thursday, propelled by increasing investor confidence that the US Federal Reserve will implement an interest rate reduction as early as next month. This optimistic sentiment softened the US dollar and put the Japanese yen under a vigilant watch for potential government intervention.
Market Momentum Builds on Dovish Fed Signals
The positive trend was evident in the MSCI's broadest index of Asia-Pacific shares outside Japan, which climbed 0.4% higher, putting it on track to end a three-week period of losses. Japan's Nikkei index experienced an even more robust surge, gaining over 1%. This rally largely mirrored the gains on Wall Street, despite a holiday-shortened trading week in the US for Thanksgiving.
Charu Chanana, Chief Investment Strategist at Saxo, attributed the stock market's buoyancy to revived expectations for a Fed rate cut, which has helped calm recent worries about an AI-driven market bubble. She suggested that markets could trade sideways or continue to grind higher into the year-end, with a traditional 'Santa rally' remaining a strong possibility.
Yen Strengthens Amid Intervention Watch and Rate Hike Speculation
The Japanese yen appreciated to 156.12 per dollar, but investors remained cautious, closely monitoring for any action from Tokyo authorities. This follows weeks of verbal warnings aimed at curbing the currency's persistent decline, which has seen it weaken by nearly 10 yen since the start of October.
Concerns over Japan's expansionary fiscal policy under Prime Minister Sanae Takaichi have contributed to the yen's slide. However, sources indicate that the Bank of Japan (BOJ) is preparing markets for a possible rate hike as soon as next month. Such a move would be part of a broader strategy to alter the currency's downward trajectory through a more consistent path of interest rate increases.
China Property Sector and Global Currency Movements
In China, the property sector returned to the forefront of investor concerns. Major developer China Vanke sought approval from bondholders to delay the repayment of a 2 billion yuan onshore bond. This news triggered a sell-off, with the firm's bonds tumbling and China's CSI300 real estate index falling to a one-year low, down 1.7%.
Meanwhile, the British pound rose to its highest level in over four weeks, reaching $1.3269, after the UK's budget announcement alleviated some concerns about the nation's long-term finances. The euro also gained strength, rising to a more than one-week high of $1.16115.
In the cryptocurrency space, Bitcoin climbed back above $90,000, poised to break a four-week losing streak with a gain of nearly 3%. Gold, however, eased by 0.4% to $4,146.53 per ounce after posting gains in the previous session.
