Asian stocks edged lower as investors scaled back expectations for Federal Reserve interest rate cuts following new signs of resilience in the US economy.
Japanese and Australian markets declined, while South Korea’s main index outperformed, driven by a rally in Samsung shares after the company unveiled a stock buyback plan.
Shane Oliver, chief economist at AMP, commented: “Another Fed rate cut in December remains probable, but it’s now a close call. The pace of rate cuts is likely to slow next year, especially with Trump’s tariff and tax policies posing potential inflationary risks over the next one to three years.”
The US dollar softened slightly after a 1.4% gain last week, marking its seventh consecutive weekly increase, as Treasury yields surged amid reduced expectations of Fed easing.
These developments, along with concerns over Chinese economic growth, have impacted assets ranging from the Australian dollar to emerging market bonds. Asian stocks fell 3.9% last week, their sharpest drop in six months.
In the commodities market, oil prices remained under pressure, reflecting worries about ample supply and weaker demand from China, the world’s largest crude importer.
Meanwhile, Ukraine’s allies are urging President Volodymyr Zelenskiy to explore new avenues for ending the conflict with Russia, as the US considers a final decision on lifting certain restrictions on Western-made weapons to target limited Russian military sites.
