Asian stock markets extended a global rally on Wednesday, building on positive momentum as fresh economic data from the United States strengthened expectations for another Federal Reserve interest rate cut in December.
US Economic Data Fuels Rate Cut Speculation
The risk-on mood across global markets received significant support from several key economic indicators suggesting cooling in the world's largest economy. Private employers shed an average of 13,500 jobs per week during the four weeks leading to November 8, according to payroll firm ADP. This concerning employment data came alongside official figures showing retail sales growth slowing in September compared to August, with the increase falling below market expectations.
Further dampening economic sentiment, the Conference Board's consumer confidence index dropped to its lowest level in seven months. Consumers expressed increased worry about labor market conditions and the outlook for household incomes, raising particular concerns among analysts ahead of the critical holiday spending period.
Stephen Innes of SPI Asset Management characterized the data release as "an avalanche of extremely stale prints" resulting from the recent government shutdown. Despite the dated nature of the information, he noted that "in a market starving for macro inputs, even freezer-burnt data tastes dovish."
Political Influence on Federal Reserve Outlook
Market optimism received an additional boost from reports that Kevin Hassett, Donald Trump's top economic aide and director of the White House National Economic Council, has emerged as the frontrunner to lead the Federal Reserve when Jerome Powell's term concludes next year.
Hassett, a close ally of the president, is viewed by market participants as likely to support the administration's preference for lower interest rates. Rodrigo Catril of National Australia Bank commented that "Hassett is viewed as closely aligned with President Trump's preference for lower interest rates, and his appointment would likely reinforce the administration's push for easier policy."
This political development comes as bets on a December rate cut have surged significantly this week, with several Federal Reserve policy board members expressing support for a third consecutive cut. Their concerns about the labor market appear to be outweighing persistent worries about inflation levels.
Asian Markets Respond Positively
The combination of economic data and political developments triggered strong performances across Asian trading floors. Tokyo's Nikkei 225 and Seoul's KOSPI both gained approximately 2 percent, leading regional advances. Other major markets including Hong Kong, Shanghai, Sydney, Singapore, Taipei, and Wellington also posted healthy gains.
This rally follows a period of market uncertainty throughout much of November, where investors had grown concerned about lofty valuations—particularly in the technology sector—and questioned the substantial investments flowing into artificial intelligence companies.
In corporate developments, Chinese ecommerce giant Alibaba saw its shares drop more than one percent after reporting decreased profits. The decline was linked to consumer subsidies and significant investments in data center infrastructure to support the company's artificial intelligence ambitions.
The improved market sentiment reflected in key financial indicators, with West Texas Intermediate crude oil rising 0.2 percent to $58.06 per barrel and Brent North Sea crude increasing by the same margin to $62.62 per barrel. Currency markets showed the dollar weakening against the euro and pound, while strengthening slightly against the yen.
