According to Yahoo News, Asian markets are expected to begin the week positively, encouraged by Wall Street's late rally on Friday and the drop in U.S. rate expectations after Federal Reserve Chair Jerome Powell signaled that the Fed is done raising interest rates and could soon move to cut them. The S&P 500's rise to its highest level this year, along with the continued loosening of financial conditions through the falling dollar and bond yields, should pave the way for a positive opening for Asian stocks and risk assets on Monday.
The dollar lost 3% in November, its largest monthly decline in a year, and fell for a third consecutive week. The two-year U.S. Treasury yield dropped 40 basis points last week, its steepest fall since March, and the implied rate on December 2024 'SOFR' futures fell below 4% for the first time. This has a significant impact, although many argue that the U.S. bond and rates markets have become too carried away and that the Fed will not ease so quickly and aggressively next year.
However, Fed policymakers are now in their 'blackout period' ahead of the December 12-13 policy meeting, meaning there will be no guidance from officials to dampen investors' enthusiasm, especially not on Monday, when the economic calendar is also very light. This could provide room for Asian equities to bounce back, as the region's underperformance has rarely been this bad in years. The regional calendar highlights on Monday include New Zealand trade data and Australian inventories and corporate profit data, all for the third quarter.