Asian markets saw subdued activity on Thursday, with investors exercising caution amid mixed economic signals and the upcoming US Thanksgiving holiday, which is expected to thin trading volumes. The MSCI Asia-Pacific Index edged down 0.07%, while Japan’s Nikkei rose modestly by 0.46%.
The cautious tone in markets reflects uncertainty over the Federal Reserve’s policy path. US data showed that while consumer spending in October outpaced expectations, progress in reducing inflation toward the Fed’s 2% target has stalled. This, combined with the potential for renewed trade tariffs under the Trump administration, raises questions about the Fed’s flexibility to continue rate cuts in 2024.
While a 25-basis-point rate cut in December is still widely expected, divisions among Federal Open Market Committee members signal uncertainty about future policy moves. Traders currently assign a 65% probability to a December cut, with further easing anticipated through 2025.
In South Korea, the central bank surprised markets by lowering its benchmark interest rate for a second straight meeting, aiming to support an economy hindered by weak growth and slowing inflation. The South Korean won depreciated following the decision.
The yen fell 0.3% to 151.615 per dollar but remained near a recent one-month high as expectations for a Bank of Japan rate hike next month boosted the currency’s outlook. Meanwhile, the euro held steady after gaining 0.7% in the previous session, supported by cautious comments from European Central Bank officials advocating a measured approach to rate adjustments.
In commodity markets, oil prices remained steady after a ceasefire agreement between Israel and Hezbollah alleviated supply concerns. Brent crude hovered at $72.80 per barrel, and US West Texas Intermediate stayed at $68.70. Gold prices softened slightly to $2,626 per ounce.
With inflation concerns, policy uncertainties, and global events shaping sentiment, traders remain hesitant to take bold positions, preferring to wait for clearer signals in the weeks ahead.
