Asian markets got a boost on Tuesday after several Federal Reserve officials made comments that sounded a lot more dovish, raising hopes that another interest rate cut is coming next month. Plus, a big tech rebound on Wall Street helped calm fears that the AI craze was turning into a bubble.
After a shaky few weeks, traders are starting to feel optimistic again. The chances of a third straight rate cut are climbing, especially as the U.S. job market shows signs of cooling while inflation stays sticky.
Fed governor Christopher Waller said on Fox Business that he’s more worried about the labor market than inflation, and even said he is pushing for a rate cut at the next meeting. His words matched comments from San Francisco Fed President Mary Daly, who said she’s not confident the labor market will hold up without help. She also mentioned that Trump’s tariffs didn’t push inflation as high as expected, which lowers the risk of prices suddenly surging again.
New York Fed President John Williams also said he sees room for another adjustment at the upcoming December 9–10 meeting. Analysts noted that the Fed isn’t pushing back on any of these remarks, which suggests Chair Jerome Powell likely agrees and is preparing for more easing.
Traders were quick to react—markets now see about a 90% chance of a rate cut. Just a week ago, that number was only around 35%.
This shift sent Wall Street higher for the second day in a row. The S&P 500 jumped around 1.6%, while the Nasdaq soared 2.7%, powered by big names like Alphabet, Meta, and Amazon.
Asia followed the same upbeat mood. Markets in Hong Kong, Shanghai, Seoul, Taipei, Manila, and Jakarta all moved higher. A few places, like Sydney, Singapore, and Wellington, saw slight dips, but overall trading was positive.
Tech stocks especially got a break. They’d been hit recently because investors worried the huge excitement around AI may have pushed prices too high, too fast. Some traders feared companies might not see returns from their massive AI investments right away.
But analysts say the picture is becoming more balanced. Saxo Markets strategist Charu Chanana wrote that AI is still one of the biggest forces driving markets, but the hype phase is fading. Investors are now being more selective. Strong earnings from major chipmakers prove there’s real demand, but people want to see long-term results, not just hype.
She added that the market is shifting from “everything AI touches goes up” to a smarter environment where solid companies get rewarded and weak ones don’t.
Sentiment also improved after Trump praised “extremely strong” U.S.-China relations following a call with President Xi Jinping. Trump said he plans to visit China in April, while Xi will visit Washington later in 2026. China’s foreign ministry said Trump acknowledged how important Taiwan is to China, though he didn’t mention that part publicly.
Key Figures (around 0230 GMT):
- Tokyo – Nikkei 225: +0.4% at 48,815.27
- Hong Kong – Hang Seng: +1.2% at 26,031.67
- Shanghai Composite: +1.1% at 3,877.86
Currencies:
- Euro/USD: $1.1526
- Pound/USD: $1.3109
- USD/JPY: 156.68 yen
Oil:
- WTI: -0.2% at $58.73
- Brent: -0.2% at $63.23
Previous session:
- Dow Jones: +0.4% at 46,448.27
- FTSE 100: -0.1% at 9,534.91
