Asian stocks track latest Wall Street rally as rate bets rise

ASIAN markets rose again on Thursday to extend the week’s global rally as traders ramp up bets on a third successive US interest rate cut next month.

With recent worries over stretched valuations appearing to be on the back burner for now, confidence continues to flow through trading floors, boosting riskier assets including bitcoin.

Comments from a number of Federal Reserve officials and a string of weak jobs reports have combined to reinforce expectations that next month’s policy meeting will end with another reduction in borrowing costs.

Meanwhile, the central bank’s “beige book” of economic conditions around the United States pointed to a growing divergence in consumption, with lower-income populations pulling back.

“Overall consumer spending declined further, while higher-end retail spending remained resilient,” said the report, adding that some retailers felt a negative hit from the record-long government shutdown.

Traders were little moved by data showing a drop in jobless claims, confounding forecasts for a small rise.

Markets are now pricing in around an 80 per cent chance of a cut on Dec 10 and a further three next year. That compares with just three reductions in total that Bloomberg said had been previously expected.

All three main indexes on Wall Street pushed higher for a fourth straight day on Wednesday, with markets there closed on Thursday for Thanksgiving.

Most of Asia took up the baton with glee.

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Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Seoul, Taipei and Jakarta all advanced, though Wellington and Manila struggled.

The global gains come after markets took a hit this month on concerns that a tech-led surge in recent years may have been overdone and the vast sums invested in the AI sector will take some time to see returns.

But those worries have for now been overshadowed by the prospect of lower rates - with the Fed focusing on the jobs market rather than worry about elevated inflation.

Analysts also pointed to a wider range of firms pushing markets higher in the latest rally, with smaller cap companies benefiting from lower borrowing costs.

And Pepperstone’s Chris Weston said Asia could see more gains.

“While funds are well aware that US markets are closed in the upcoming session and most traders will also take Friday off, if Asia-based participants see a meaningful skew for further upside in US equity markets, it would make sense for them to get positioned for that risk,” he wrote in a note.

Bitcoin, which last plunged to a seven-month low just above US$80,000 amid the recent market swoon, broke back above US$90,000 as risk appetite returned. However, it is still off the record high above US$126,200 touched in early October.

In corporate news, Tokyo-listed beer titan Asahi fell in the morning as it said it would delay its financial results owing to a cyberattack that began in September.

The maker of Asahi Super Dry, one of Japan’s most popular beers, announced it was experiencing system troubles on Sep 29, stopping its ability to receive orders and to ship products. It blamed a ransomware attack.

Meanwhile, South Korea’s largest crypto exchange is set to be acquired, pending board approval on Thursday, by one of the country’s top tech giants.

Naver Financial said on Wednesday it will buy Dunamu, the operator of Upbit, in a deal valued at more than US$13 billion.

Upbit is world’s fourth largest crypto exchange in terms of trading volume. AFP