ASIAN markets rallied on Monday and gold hit a record high as the latest round of US data boosted hopes for more interest rate cuts, while worries over AI spending also subsided.
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 on 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 per cent thanks to a weaker yen.
Gold, which benefits from lower US interest rates, hit a fresh record above US$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 per cent 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 on 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 per cent against the dollar on Friday after bank boss Kazuo Ueda chose not to signal more increases early in the new year. AFP
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