Investing.com-- Most Asian stocks rose sharply on Wednesday as markets priced in a greater chance the U.S. Federal Reserve will cut interest rates next month, with technology shares leading gains as they rebounded from recent losses.
Australian stocks rose even as stronger-than-expected October inflation data greatly diminished expectations for more rate cuts by the Reserve Bank.
Regional markets took positive overnight cues from Wall Street, as a batch of middling economic readings drummed up optimism over a Fed December cut. Two Fed officials have also spoken in support of a December easing since Friday.
Tech shares also rebounded, although chipmaker NVIDIA (NASDAQ:NVDA) slid to a two-month low after reports said Google (NASDAQ:GOOGL) was preparing its own artificial intelligence chips, which could rival offerings from the former.
S&P 500 Futures rose 0.2% in Asian trade. Focus is now on upcoming PCE price index data-- the Fed’s preferred inflation gauge-- for more cues on rates.
Markets are pricing in a 82.7% chance the Fed will cut rates by 25 basis points during its December 9-10 meeting, up sharply from a 43.4% chance seen last week, CME Fedwatch showed.
Asia tech rebounds amid rate cut cheer, AI hopes
Japan’s Nikkei 225 and South Korea’s KOSPI were the best performers in Asia, rising about 2% each on a sharp recovery in tech shares. Japan’s TOPIX index added 1.9%, benefiting from buying into industrials and energy stocks with exposure to the artificial intelligence trade.
Chipmaking, electronics, and data center stocks rose across the board on renewed hopes that spending on AI will remain strong in the coming quarters.
Japanese tech conglomerate SoftBank Group Corp. (TYO:9984) surged 6.3%, rebounding from a 2-½ month low after it lost about 10% apiece in the last two sessions. Concerns over the company’s exposure to OpenAI, which also faces increased competition from Google, had battered Softbank in recent sessions.
Nvidia supplier Ibiden Co Ltd (TYO:4062) fell 5.2% after it was downgraded to Equal Weight by Morgan Stanley, while chip components maker Murata Mfg Co (TYO:6981) jumped 2.8% after it was upgraded to Overweight.
While concerns over Nvidia’s valuation and circular financing remained, tech shares were encouraged by Alphabet hitting a series of record highs, as the company reportedly prepared its own processors.
Australia shares blaze past hot CPI data
Australia’s ASX 200 rose 0.9%, aided by gains in heavyweight banks and mining stocks even as hotter-than-expected consumer inflation data wiped out bets on more interest rate cuts by the Reserve Bank.
CPI inflation rose 3.8% in October, more than expected, while underlying inflation also increased amid surging rents and electricity prices.
The print saw analysts raise even more questions over any near-term easing by the RBA. Capital Economics warned that the central bank could hold off on any more rate cuts until the second half of 2026, as it grapples with a resurgence in local inflation.
Hong Kong lags, Alibaba down after mixed earnings
Hong Kong’s Hang Seng index lagged its tech-heavy peers, weighed by a 1.5% drop in Alibaba Group after it reported somewhat mixed earnings for its fiscal second quarter.
While Alibaba’s top and bottom line beat expectations, on strong growth in its e-commerce and cloud divisions, the company’s margins were seen deteriorating as it continues to spend heavily on consumer subsidies and its AI ambitions.
But shares of food delivery giant Meituan (HK:3690), which is a major rival for Alibaba in the sector, surged over 6% and were the top performers on the Hang Seng.
Mainland Chinese stocks also logged small gains, with the Shanghai Shenzhen CSI 300 and Shanghai Composite rising 0.5% and 0.1%, respectively. Caution towards China grew after the U.S. was seen intervening in a bitter diplomatic dispute between the country and Japan.
Still, reports of a call between U.S. President Donald Trump and Chinese President Xi Jinping did raise some hopes of improving ties between the world’s largest economies.
Among broader Asian markets, Singapore’s Straits Times index rose 0.6%, while futures for India’s Nifty 50 index fell slightly.
