Asia markets set for gains as Wall Street powers ahead, key China data in focus

Federal Reserve Chair Jerome Powell’s dovish tone Wednesday raises the likelihood of rate cuts coming sooner than some anticipated, and improves the chances of a soft landing if inflation continues to ease, Deutsche Bank said.

“While our baseline remains that the first rate cut is likely to come in June 2024 and that the Fed will reduce rates by 175bps next year, today’s meeting points to dovish risks to this expectation,” Matthew Luzzetti, chief U.S. economist, wrote Wednesday in a note titled, “December FOMC: Powell breaks out punchbowl early at the holiday party.”

“We see heightened risks that rate cuts could come as early as March,” Luzzetti continued. “Earlier policy easing in the presence of more substantial disinflation would improve soft landing prospects.”

In fact, the CME FedWatch Tool shows markets are currently pricing in a roughly 72% probability the Fed will cut rates by 0.25 percentage points in March. That’s up from 65% on Wednesday.

— Sarah Min, Michael Bloom

Mega cap tech names lagged behind the market, inching into negative territory amid broader market gains.

Microsoft and Netflix fell around 2.3% as of Thursday afternoon. Amazon and Alphabet declined 1.1% and 0.9%, respectively. Apple and Meta Platforms also saw their shares decline by 0.2% and 0.5%, respectively.

Meanwhile, the S&P 500 was up 0.2%, while the Nasdaq Composite inched up 0.1%.

— Hakyung Kim

Oil prices settled 3% higher on Thursday on a weaker dollar and slight upgrade to demand growth in 2024.

The West Texas Intermediate contract for January gained $2.11, or 3.04%, to settle at $71.58 a barrel, while the Brent contract for February rose $2.35, or 3.16%, to settle at $76.61 a barrel.

The U.S. dollar also dropped to a four-month low Thursday after the Federal Reserve indicated the rate hikes were over. A weaker dollar makes oil cheaper, which can lift demand.

And the International Energy Agency on Thursday said global oil demand would grow by 1.1 million barrels per day in 2024, up slightly from its previous forecast of 930,000 barrels per day.

— Spencer Kimball

The benchmark rate broke below 4% for the first time since August, as traders mounted bets on Fed rate cuts for 2024. The 10-year was last trading around 3.95%.

— Fred Imbert