Global stocks opened the week with a steadier pulse on Monday, lifted by renewed expectations that the U.S. Federal Reserve could cut interest rates in December—even as policymakers remain openly split on the path forward. The optimism offered investors a breather after a bruising stretch marked by tech volatility and intensifying fears of a market correction.
With Japan shut for a holiday, trading across Asia was thinner than usual, but momentum held. MSCI’s broad Asia-Pacific index outside Japan rose 0.4 percent, while South Korea’s tech-centric Kospi added 0.7 percent. Futures also pointed higher: Nasdaq contracts climbed 0.64 percent, S&P 500 futures rose 0.45 percent, and EUROSTOXX 50 futures advanced 0.78 percent.
Expectations for a rate cut have shifted sharply. Fed funds futures now assign a 57 percent chance of a 25-basis-point reduction—up from less than 30 percent a week earlier. Remarks on Friday by New York Fed President John Williams, who said he still sees “room for a further adjustment,” helped push the odds as high as 70 percent at one point.
Still, currency markets showed lingering caution. The Japanese yen, hovering near a ten-month low, slipped another 0.2 percent to 156.72 per dollar.
Asian traders were looking ahead to several potential catalysts, including U.S. retail sales and producer price index figures—some of the last key data points before the Fed’s December 9–10 meeting. The PPI reading, analysts note, has taken on heightened significance after the government shutdown delayed the release of the October personal consumption expenditures report.
A stronger-than-expected PPI could complicate the case for a cut, reinforcing concerns that inflation remains more stubborn than the softening labor market suggests.
Last week’s turbulence—driven largely by fears that the AI boom may be overheating—left investors on edge. The rapid run-up in tech valuations, led by Nvidia’s stunning rise past the $5 trillion mark, has sparked fresh warnings of a potential pullback as profit expectations struggle to keep pace with enthusiasm.
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But Monday’s tone was markedly calmer. Hong Kong and Seoul gained more than one percent, while Sydney, Singapore, Wellington, and Taipei all advanced. Shanghai and Manila slipped, but U.S. futures pointed upward. Bitcoin, meanwhile, hovered around $87,000—off last month’s record but recovered from its recent lows.
For now, the mood is steadier. Whether it lasts depends on this week’s data.