Asian Markets Follow Wall Street Higher
Stock markets across Asia experienced significant gains on Wednesday, propelled by a powerful rally on Wall Street driven by mounting expectations that the Federal Reserve will soon move to cut interest rates. This optimistic sentiment swept through regional exchanges, with technology shares and major exporters leading the charge.
Regional Gains and Key Performances
In Japan, the Nikkei 225 index jumped 2% to close at 49,650.77, marking a broad-based advance. South Korea's Kospi followed suit, gaining 2.1% to reach 3,940.15, bolstered by a 2.3% rise for Samsung Electronics, the market's largest component.
Chinese markets saw more restrained growth. Hong Kong's Hang Seng index rose 0.5% to 26,013.33, while the Shanghai Composite edged up a modest 0.1% to 3,875.48. Notably, shares in e-commerce titan Alibaba fell 1.1% after its U.S.-traded shares dropped 2.3% on Tuesday. This decline came despite the company reporting stronger-than-expected revenue, as its profit ultimately fell short of analyst forecasts.
Australia's S&P/ASX 200 climbed 0.9% to 8,615.30. In New Zealand, the S&P/NZX 50 added 0.7% after the country's central bank decided to cut its Official Cash Rate to 2.25% from 2.5%.
Wall Street Momentum and Economic Signals
The Asian rally directly mirrored a strong performance on Wall Street. On Tuesday, the S&P 500 rose 0.9% to 6,765.88, the Dow Jones Industrial Average rallied 1.4% to 47,112.45, and the Nasdaq composite gained 0.7% to 23,025.59.
The prospect of lower interest rates provided a particularly strong boost to smaller companies, which often rely on borrowing to fund expansion. The Russell 2000 index of small-cap stocks surged 2.1%, outperforming the broader market.
Traders are now betting on an 83% probability of a Fed rate cut in December, according to data from CME Group. This shift in sentiment follows mixed economic data, including weaker-than-expected U.S. retail sales in September and a larger-than-anticipated drop in consumer confidence for November. These signals suggest the economy could benefit from the stimulus of lower borrowing costs.
Easier interest rates can invigorate the economy by encouraging both households and companies to take on more debt for spending and investment. However, the Fed must balance this against inflationary pressures. A separate report indicated that U.S. wholesale inflation in September was slightly worse than forecast, though a key underlying trend was marginally better.
Several major retailers saw their shares leap after reporting robust summer profits. Abercrombie & Fitch soared 37.5% after delivering a better profit than expected, while Kohl’s surged 42.5% after turning a profit in the latest quarter against analyst expectations of a loss. Best Buy rose 5.3% after raising its full-year profit forecast, citing strong performance in computing, gaming, and mobile phones.
In early Wednesday commodity trading, U.S. benchmark crude oil gained 24 cents to $58.19 per barrel. Brent crude, the international standard, picked up 26 cents to $62.06 per barrel. The U.S. dollar slipped slightly against the yen, while the euro gained ground.
