Asian stocks steady on Fed rate-cut optimism; yen firms

SINGAPORE – Asian stocks made a steady start on Monday to the final month of 2025 as US rate-cut optimism lifted risk sentiment ahead of economic data, while the yen firmed, with investors weighing the prospect of a near-term rate hike.

The spotlight in the currency market has been on the Japanese yen, which strengthened to 155.64 per US dollar as Bank of Japan Governor Kazuo Ueda took the stage in Nagoya, Japan, with investors parsing his comments for cues on the timing of the next hike.

Ueda said in a speech to business leaders that the central bank will consider the “pros and cons” of raising interest rates at its next policy meeting in December.

In stocks, MSCI’s broadest index of Asia-Pacific shares outside Japan was steady at 703.19, having gained 23.5% so far this year and on course for its best annual gain since 2017. Japan’s Nikkei fell 1.3% in early trading.

US stock futures, though, were lower in Asian hours, while Hong Kong’s Hang Seng rose over 1% pushing Asian stocks higher.

“The risk bulls roll into December feeling positive about directional bias,” said Chris Weston, head of research at Pepperstone.

“As the clouds of worry that cast an ominous shadow over markets through to mid-November gently dissipate, they give way to new emotions — notably the fear of not participating and the risk of underperforming benchmark targets.”

Investor focus this week will be on US economic releases that cover manufacturing and services activity as well as consumer sentiment.

“With the US data void finally being filled and a busy economic calendar ahead, December looks set to be a merry one for volatility hunters,” said Matt Simpson, senior market analyst at StoneX in Brisbane.

Simpson said if the incoming data signal a slowdown without tipping into recession, then sentiment will likely stay buoyant while the US dollar weakens as it typically does at this time of year.

The dollar index, which measures the US currency against six other rivals, was at 99.414, little changed on the day. The index has dropped 8% this year, with much of the losses coming in the first half of the year.

CONSUMER SPENDING IN FOCUS

Investors will watch out for comments from Federal Reserve Chair Jerome Powell later in the day as they look for clues on what the Fed will do later this month.

Dovish comments from policymakers have convinced investors that a rate cut is on the cards. Traders are pricing in an 87% chance of a cut later in the month.

Attention will also be on early indications about holiday consumer spending as data from Black Friday and Cyber Monday retail sales events trickle in.

US shoppers spent a record USD 11.8 billion online, up 9.1% from 2024 on Black Friday, according to Adobe Analytics, which tracks 1 trillion visits that shoppers make to online retail websites.

Market focus has been on the yen for the last few weeks as doubts over when the next interest rate hike will come, and worries over fiscal policies under Prime Minister Sanae Takaichi have left the currency in the intervention zone.

Japan’s finance minister said on Sunday that recent erratic swings in the foreign exchange market and rapid yen weakening are “clearly not driven by fundamentals”, in yet another verbal warning that so far has not helped slow the yen’s decline.

In commodities, oil prices rose after OPEC+ agreed to leave oil output levels unchanged for the first quarter of 2026 at its meeting as the group slows its push to regain market share amid fears of a looming supply glut.

Brent crude futures were 1% higher at USD 63.03 a barrel. US West Texas Intermediate crude was at USD 59.16 a barrel, up 0.99%.

(Reporting by Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman)