MSCI Inc.’s gauge of Asian equities rose 0.2%. US stock futures were steady after the S&P 500 climbed 0.3% and the Nasdaq 100 added 0.2% on Wednesday. A gauge of the dollar was little changed after dropping 0.4% in the previous session that also saw US treasuries rise across the curve, pushing two-year yields down to around 3.48%. Bitcoin slipped, hovering near $93,000 after a two-day rally.
Data on Wednesday showed US companies shed payrolls in November by the most since early 2023, reinforcing concerns about a more pronounced labor market weakening. Swaps pricing indicated rising expectations for a December cut Wednesday, with traders assigning more than a 90% chance to a 25-basis-point reduction. Separately, US services activity expanded at a slightly faster pace, while a measure of prices paid dropped to a seven-month low.
“The faltering labor market will be the focus for the Fed at their December meeting,” said Jeff Roach at LPL Financial. “Since earlier this year, when we started to see a material weakening in the jobs market, I have believed labor demand is weak enough for the Fed to cut, including this month.”
In Asia today, investors will be watching Japan’s auction of 30-year bonds. The dollar’s drop overnight puts focus on weaker Asian currencies like the Indian rupee, which slipped past the key psychological level of 90 per dollar on Wednesday. Meanwhile, the yuan is inching close to a key psychological level of 7 per dollar, reflecting optimism over improved US-China relations but the gradual appreciation shows Beijing is tightly managing its gains.
Trade and geopolitics are also on traders’ radar. Commerce Secretary Howard Lutnick said that the US is expecting a large investment pledge from Taiwan in trade talks. Separately, Nvidia Corp.’s Jensen Huang said he’s unsure whether China would accept the firm’s H200 artificial intelligence chips should the US relax restrictions on sales of the processors, following a meeting Wednesday with President Donald Trump.
US Moves
Despite the apparent confidence among investors, US policymakers have been torn as to whether they’ll cut rates for a third straight meeting as they attempt to balance the slowdown in the job market with still-elevated inflation.Notably, gains for American benchmarks came despite weakness in most megacaps. Shares in Salesforce Inc. rose in post-market trading after the company delivered an outlook for revenue in the current period that topped analysts’ estimates. Microsoft Corp. slid 2.5% on a report of lower demand for some artificial-intelligence tools even as the company said aggregate sales quotas for AI products have not been reduced.
Before their final policy meeting of the year, Fed officials will get a dated reading on their preferred inflation gauge. On Friday, the September income and spending report is due to be released — long delayed because of the government shutdown.
The figures will include the personal consumption expenditures price index and a core measure that excludes food and energy. Economists project a third straight 0.2% increase in the core index. That would keep the year-over-year figure hovering just below 3%, a sign that inflationary pressures are stable, yet sticky.
“Right now, the data argues for additional Fed funds rate cuts. US labor demand is weak, consumer spending is showing early signs of cracking, and upside risks to inflation are fading,” said Elias Haddad at Brown Brothers Harriman & Co.
In commodities, silver traded near an all-time high on the reinforced bets of a Fed cut, while gold was little changed. Oil edged up after a fresh round of US-Russia talks failed to reach a deal to end Moscow’s war in Ukraine, boosting fears that restrictions on Russian oil supply could remain in place for longer.
