Financial markets across Asia posted gains on Wednesday, December 3, 2025, mirroring a positive lead from Wall Street. However, the upward movement was measured as traders adopted a cautious stance ahead of pivotal economic data releases from the United States.
Investors Await Final Clues Before Fed Decision
The trading focus is firmly fixed on the last set of major US indicators scheduled before the Federal Reserve's policy meeting next week. While financial markets have already priced in a high probability of a third consecutive interest rate cut on December 10, this week's data could significantly influence the central bank's policy trajectory for the coming year.
The key reports in focus are the ADP private-sector employment data, due later on Wednesday, and the Personal Consumption Expenditures (PCE) price index set for release on Friday. The PCE index is the Fed's preferred measure for tracking inflation, making it a critical piece of the puzzle for policymakers.
Hawkish Cut on the Horizon?
Money markets currently estimate a 90% chance of a rate reduction next week, with expectations for three more cuts before the end of 2026. This optimistic outlook has been further bolstered by reports that Kevin Hassett, a former top economic adviser to President Donald Trump and a known advocate for lower rates, is a leading candidate to succeed Jerome Powell as Fed Chair in May.
Despite the broad consensus for a cut, analysts note lingering divisions within the Fed. Some officials are concerned about targeting a softening labour market, while others remain focused on persistently high inflation. This internal debate could lead to what analysts like Andrew Brenner of NatAlliance Securities describe as a "hawkish cut"—a reduction in rates accompanied by cautious language about future policy.
IG market analyst Fabien Yip emphasized the importance of the upcoming data, stating that "any deviation could alter expectations regarding the Fed's policy stance." He added that the accompanying personal income and spending figures would offer further insight into consumer resilience.
Market Movements and Sector Performance
Following gains on Wall Street, where all three major indexes closed higher, most Asian markets followed suit. Tokyo's Nikkei 225 led the advance, climbing over 1.1%. Markets in Seoul, Sydney, Singapore, Wellington, Taipei, and Jakarta also finished in positive territory. However, exchanges in Hong Kong, Shanghai, and Manila experienced slight declines.
In a notable rebound, Bitcoin surged back above the $90,000 mark, recovering from a nearly 10% drop earlier in the week. The recovery comes after a volatile period for the cryptocurrency, which hit a record high above $126,250 in October before plunging to around $80,550 last month.
Providing a dose of early festive cheer, the National Retail Federation reported a record 202.9 million shoppers during the recent Black Friday holiday weekend, suggesting continued consumer engagement despite economic headwinds.
