SINGAPORE: Most emerging market equities advanced on Tuesday, led by South Korea and Taiwan stocks, as several US Federal Reserve officials signalled support for a potential interest rate cut in December, raising market bets of upcoming monetary easing.
The MSCI Emerging Asia Index climbed 0.9 per cent, extending its advance for a second session. Seoul’s benchmark edged 0.1 per cent higher, while Taiwan’s and Thailand’s benchmark indexes each gained 1.1 per cent.
Asian market momentum has strengthened over the past two days as US Fed officials voiced backing for policy easing next month. Fed Governor Christopher Waller said the current soft labour market warrants another quarter-point rate cut in December.
Lower borrowing costs in the world’s largest economy typically benefit open emerging-Asian economies, giving their central banks more room to reduce domestic interest rates.
“If the Fed does cut in December, it would symbolically support the relative ease towards the market’s perceived terminal Fed funds rate of 3 per cent,” said Chris Weston, head of research at Pepperstone.
“Holding rates steady in December, at a time when the labour market is fragile and both short- and long-term US inflation expectations are falling, would be a disconnect that likely wouldn’t sit well with the market.”
Markets are pricing in an 80.9 per cent chance of a reduction of 25 basis points at the December meeting, according to CME’s FedWatch Tool, up from 42.4 per cent last week. U.S central bank officials are scheduled to meet on December 9 and 10.
In Southeast Asia, stocks in Jakarta slipped nearly 1 per cent from their record-high levels touched on Monday. The benchmark index in the Philippines rose as much as 0.7 per cent to its highest level since late-October.
Late on Monday, Bangko Sentral ng Pilipinas’ governor Eli Remolona, Jr said that inflation expectations in the country were “more or less anchored” and he was pleased that consumer price increases has averaged below their target level over the year.
Singapore’s benchmark index fell 0.4 per cent, following a surprise uptick in the city-state’s core inflation for October. Following the data release, Bank of America analysts now expect the Monetary Authority of Singapore to start normalisation as early as April instead of October 2026.
Asian currencies posted marginal gains, with the Malaysian ringgit and Indonesian rupiah up about 0.2 per cent each, while the Philippine peso, Singapore dollar and Thai baht were little changed.
© New Straits Times Press (M) Bhd
