The Japan Times - Asian markets rally with Wall St as rate hopes rise, AI fears ease

Investors were back in the saddle for the final business days before Christmas, having had a minor wobble earlier in the month on concerns that the Federal Reserve would hold off easing monetary policy further in the early part of 2026.

Figures last week showing US unemployment hit a four-year high in November came as a report indicated the rise in consumer prices slowed more than expected.

That stoked bets on the Fed lowering borrowing costs early next year. Investors had pared their forecasts after the bank indicated it could take a pause on further cuts in its post-meeting statement earlier this month.

"This labour market softening and inflation moderation strengthened Federal Reserve easing expectations for 2026," wrote IG market analyst Fabien Yip.

However, she added that "the low inflation reading may prove temporary as shutdown-related data collection disruptions likely suppressed the figure, which could normalise higher once data gathering processes resume".

Asian tech firms led the gains Monday with South Korea's Samsung Electronics, Taiwan's TSMC and Japan's Renesas among the best performers.

Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei and Manila all enjoyed healthy advances.

Tokyo was the standout, piling on two percent thanks to a weaker yen.

Gold, which benefits from lower US interest rates, hit a fresh record above $4,388, while silver also struck a new peak.

The precious metals, which are go-to assets in times of crisis, also benefited from geopolitical worries as Washington steps up its oil blockade against Venezuela and after Ukraine hit a tanker from Russia's shadow fleet in the Mediterranean.

Stephen Innes at SPI Asset Management said: "Asian equity markets are stepping onto the floor with a constructive bias, taking their cue from Friday's solid rebound in US stocks and the growing belief that the final stretch of the year still belongs to the bulls."

The equity gains tracked a surge on Wall Street led by the Nasdaq as technology giants following a bumper earnings report from chip giant Micron Technology that reinvigorated the AI trade.

That came on top of news that Oracle will take a 15 percent stake in a TikTok joint venture that will allow the social media company to maintain operations in the United States.

The tech bounce came after a bout of selling fuelled by concerns that valuations had been stretched and questions were being asked about the vast sums invested in artificial intelligence that some warn could take time to see returns.

Forex traders are keeping tabs on Tokyo after Japan's top currency official said he was concerned about the yen's recent weakness, which came after the central bank hiked interest rates to a 30-year high on Friday.

"We're seeing one-directional, sudden moves especially after last week's monetary policy meeting, so I'm deeply concerned," Atsushi Mimura said Monday.

"We'd like to take appropriate responses against excessive moves."

The comments stoked speculation officials could intervene in currency markets to support the yen, which fell more than one percent against the dollar Friday after bank boss Kazuo Ueda chose not to signal more increases early in the new year.

- Key figures at around 0230 GMT -

Tokyo - Nikkei 225: UP 2.0 percent at 50,480.76 (break)

Hong Kong - Hang Seng Index: UP 0.2 percent at 25,728.31

Shanghai - Composite: UP 0.6 percent at 3,914.36

Dollar/yen: DOWN at 157.40 yen from 157.59 yen on Friday

Euro/dollar: DOWN at $1.1718 from $1.1719

Pound/dollar: UP at $1.3396 from $1.3386

Euro/pound: DOWN at 87.47 pence from 87.55 pence

West Texas Intermediate: UP 0.7 percent at $56.92 per barrel

Brent North Sea Crude: UP 0.7 percent at $60.91 per barrel

New York - Dow: UP 0.4 percent at 48,134.89 (close)

London - FTSE 100: UP 0.6 percent at 9,897.92 (close)

Y.Watanabe--JT