Today's Edition
(AFP)
Investors on Tuesday welcomed more dovish comments from Federal Reserve officials reinforcing hopes it will cut interest rates next month, while a tech-led rally on Wall Street soothed recent AI bubble worries.
After a swoon in recent weeks, optimism appeared to be returning to trading floors as the chances of a third successive reduction in US borrowing costs increases as a weakening labour market offsets stubbornly high inflation.
Fed governor Christopher Waller told Fox Business on Monday that inflation was not his main worry and that his "concern is mainly the labour market, in terms of our dual mandate" of the Fed to support jobs and keep a cap on prices.
"So I'm advocating for a rate cut at the next meeting."
His comments echoed those of San Francisco Fed president Mary Daly, who told the Wall Street Journal: "On the labour market, I don't feel as confident we can get ahead of it."
She added that the risk of a bust higher in inflation was a lower risk as the impact of US President Donald Trump's tariffs had been less than expected.
New York Fed boss John Williams said Friday that he still sees "room for a further adjustment" at the bank's December 9-10 policy meeting.
Analysts pointed out that the lack of pushback from the Fed on the remarks suggested boss Jerome Powell backed them and was preparing for another cut.
Traders now see about a 90% chance of a reduction, having been around 35% last week.
The prospect of lower borrowing rates pushed Wall Street sharply higher for a second successive day Monday, with the S&P 500 up around 1.6 percent.
The Nasdaq charged 2.7 percent higher thanks to a surge in market heavyweights including Alphabet, Meta and Amazon.
And the gains continued in Asia, which built on Monday's strong performance.
Tokyo, Shanghai, Sydney, Seoul, Mumbai, Bangkok and Jakarta all advanced, though there were pullbacks in Manila, Singapore and Wellington.
London, Paris and Frankfurt opened higher.
Tech firms have enjoyed a revival after suffering a period of selling in recent weeks, owing to concerns that the AI-led splurge this year may have pushed valuations too far and the huge investments made in the sector could take time to come to fruition.
While there is debate about whether the advance has more legs, observers say the outlook is more nuanced.
Sentiment was also given a lift after Trump praised "extremely strong" US-China relations following a call with his Chinese counterpart Xi Jinping.
He also said he will visit China in April and that Xi will make a trip to Washington later in 2026.
The call came after the pair met in late October for the first time since 2019, engaging in closely watched trade talks between the world's top two economies.
