Asian Markets Start December Cautiously Amid Rate Cut Expectations

According to Yahoo News, Asian sharemarkets began December on a cautious note following recent strong gains, although growing expectations that Europe and the U.S. are set to cut rates should help ease pressure on local currencies and central banks. Global oil prices continued to decline after a drop of over 2% overnight as voluntary oil output cuts by OPEC+ producers for the first quarter of next year fell short of market expectations. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5% after a surge of 7.3% last month, the most since January. Japan's Nikkei remained flat, having also jumped 8.5% in November in the best month in three years. Chinese bluechips dropped 0.6% and Hong Kong's Hang Seng index fell 0.4%. Regional surveys of purchasing managers showed mixed results in November. Japan's factory activity shrank at the fastest pace in nine months, South Korea's factory activity steadied, and China's manufacturing industry returned to expansion, based on a private survey. Overnight, data revealed that both U.S. and European inflation are cooling as desired. The Federal Reserve's preferred gauge of inflation - the personal consumption expenditures (PCE) price index - stood unchanged for October, while consumer spending also pulled back. The major surprise was with euro zone inflation, which missed expectations by a large margin, triggering a slide in the euro and prompting markets to price in rate cuts of about 110 basis points next year, commencing as early as April. Traders are now waiting for Fed Chair Jerome Powell's Q&A appearance on Friday, with bulls betting the central bank chief will accommodate their early and aggressive U.S. policy easing bets for next year. Fed funds futures imply rate cuts of 115 basis points.