Asian equities saw mixed movements during today’s session, as investors increasingly priced in a potential U.S. rate cut at next week’s anticipated Federal Reserve meeting. While the momentum wasn’t fully reflected across all markets, it was enough to lift Japanese and South Korean stocks into positive territory, while other indices remained under pressure amid caution and anticipation.
The Nikkei 225 jumped 1.6%, supported by strong inflows into heavyweight technology stocks the same sector that drove Wall Street’s gains yesterday. South Korea’s KOSPI followed suit, rising 1.3% on optimism that liquidity conditions could ease should the Fed move forward with a 25 basis point rate cut.
Market bets on a quarter point cut have exceeded 85%, marking a significant increase compared to last week’s levels. These expectations are creating a cautiously positive risk sentiment, though it remains fragile as long as policymakers continue to send mixed signals.
Asian currencies experienced a low-momentum session, with traders avoiding risk ahead of next week’s Federal Reserve meeting. This wait and see stance kept flows limited and resulted in sideways movements across most currency pairs, reflecting the lack of meaningful catalysts before key U.S. data releases.
The U.S. Dollar Index slipped slightly by 0.2% during the Asian session, a decline that reflects softer short term demand rather than any structural shift. The USD/JPY pair fell by a similar margin as risk appetite improved following gains in Japanese stocks, while USD/KRW remained broadly stable. In contrast, the Australian dollar posted notable gains, with AUD/USD rising around 0.3% to its highest level in a month. The move was driven by Australia’s Q3 GDP data: quarterly growth came in at 0.4% weaker than expected while annual growth reached 2.1%, the strongest pace in two years.
Australian equities remained almost unchanged despite the GDP release. The quarterly slowdown to 0.4%, below expectations of 0.7%, reflects a loss of economic momentum. However, annual growth at 2.1% marks the best performance in two years. The main drag came from falling inventories, while household spending and business investment held steady. This mix adds further uncertainty to the monetary policy outlook: solid annual performance but clear quarterly weakness, which may push the Reserve Bank of Australia to delay any near-term easing measures.
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