Global Financial Overview : Bitcoin Reclaims $90k as Asian Stocks Rise on Fed Cut Hopes
- Global stocks and Bitcoin have rallied as traders now see an 80% chance of a Federal Reserve rate cut in December, driven by softening US labor data.
- Political speculation regarding a pro-growth Fed Chair and Japan’s new economic stimulus plan are fueling risk appetite across Asian and US markets.
- While the tech and crypto sectors recover, China’s property market remains strained with new debt delays, and oil prices are dropping on hopes of a Ukraine peace deal.
Asian markets have joined a global equities rally, surging in tandem with Wall Street as optimism returns to the financial sector. This positive momentum is driven largely by a dramatic shift in investor expectations regarding the Federal Reserve. Just a week ago, traders were skeptical about immediate relief, but market sentiment has flipped, now pricing in an 80% probability that the US central bank will lower interest rates by a quarter-point in December. This renewed confidence has lifted indices across Japan, South Korea, and Australia, setting a bullish tone ahead of the Thanksgiving holiday.
The driving force behind this optimism is a series of economic indicators suggesting the US economy is cooling just enough to warrant intervention. The Federal Reserve’s "Beige Book," a survey of regional economic conditions, revealed a slight decline in employment and only moderate price increases. While a softening labor market might usually be cause for concern, in this context, it is viewed as a "goldilocks" signal. It confirms that inflation is slowing down without a full-blown recession, giving the Fed the green light to cut borrowing costs to support the economy.
Political developments in the United States are also influencing these financial currents. Speculation is mounting that Kevin Hassett, a known advocate for lower interest rates, is the leading contender to become the next Fed Chair. Investors interpret this potential appointment as aligning with President Donald Trump’s preference for easier monetary policy. This political backdrop has reinforced the belief that the era of high interest rates is coming to an end, encouraging traders to move back into riskier assets.
This shift in risk appetite is perhaps most visible in the cryptocurrency sector. After weeks of selling pressure, Bitcoin has clawed its way back above the psychological $90,000 threshold for the first time in nearly a week. The recovery in digital assets mirrors the broader market's move away from fear and toward "cautious optimism." As the anxiety surrounding tech valuations subsides, capital is flowing back into speculative assets, banking on the idea that liquidity will increase as rates come down.
In Asia, the picture is nuanced by local economic maneuvers. Japan is taking aggressive steps to stimulate its economy, with Prime Minister Sanae Takaichi’s government planning to issue more bonds to fund a massive economic package. This fiscal spending is boosting local stocks, with the Topix index rising 0.7%. However, the region is still grappling with the fallout from China’s property crisis. Major developers like China Vanke are proposing delays on bond repayments, highlighting a sharp contrast between the booming tech sector and the struggling real estate market.
Meanwhile, in the United Kingdom, fiscal policy is taking a different turn. Chancellor Rachel Reeves delivered a new budget that expands the country's fiscal buffer to £22 billion, funded largely through £29.8 billion in new taxes on gambling and prime real estate. Despite the tax hikes, the British pound and government bonds (gilts) strengthened, suggesting that investors value the government's commitment to fiscal stability.
Commodity markets are also reacting to geopolitical shifts. Oil prices have edged lower as investors track US-led diplomatic efforts to end the war in Ukraine. The prospect of peace is reducing the "risk premium" usually built into energy prices during conflicts. Conversely, gold continues to advance, serving its traditional role as a safe haven and benefiting from the weakness in the US dollar, which has fallen for three consecutive days.
Ultimately, the market narrative has shifted from fear of inflation to anticipation of relief. While bond yields in the US have stalled near 4%, the overwhelming consensus is that the Federal Reserve is ready to pivot. With traders now expecting not just a December cut but three additional cuts by the end of 2026, the financial world is positioning itself for a new cycle of cheaper money and potential growth, shaking off the gloom that dominated earlier in the month.