Equities Rose on Fed Cut Bets – Asia Market Wrap

Asian equities recovered from last week’s selloff as muted US inflation fuelled Federal Reserve rate cut predictions. Following a drop, the dollar recovered.

The MSCI Asia Pacific Index reversed a six-day drop, with benchmarks in South Korea and Taiwan recovering by more than 1%. US equities contracts rose as the so-called core personal consumption expenditures price index rose at the weakest rate since May, resulting in a 1.1% increase in the S&P 500 Index on Friday.

Monday’s moves provide some relief to investors after a string of strong US economic statistics saw the Fed reduce the amount of cuts it expects in 2025. Overall, investors remain wary as they prepare for the threat of sweeping global tariffs imposed by US President-elect Trump, while China’s economic recovery remains sluggish.

Australia’s 10-year bond rate plummeted nine basis points on Monday in holiday-shortened trade, mirroring a Friday surge in US counterparts sparked by the PCE data. US Treasuries were stable in Asia trading.