HONG KONG: Markets fluctuated on Friday (Nov 28) at the end of a strong week for equities, fuelled by growing expectations that the Federal Reserve will cut interest rates again next month.
Traders took silence from New York’s Thanksgiving break as a reason to have a breather and take stock of a healthy rebound from November’s swoon that was sparked by AI bubble threats.
But while there is much debate on whether valuations in the tech sector are overstretched, focus this week has been firmly on the prospect of more rate cuts.
A string of top Fed officials have lined up to back a third straight reduction, mostly saying that worries over a weakening labour market trumped still elevated inflation.
Attention now turns to a range of data releases over the next week or so that could play a role in the bank’s final decision, with private hiring, services activity and personal consumption expenditure – the Fed’s preferred gauge of inflation.
With the government shutdown postponing or cancelling the release of some key data, closely watched non-farm payrolls figures are now due in mid-December, after the Fed’s policy decision.
“This delay places much greater scrutiny on the latest November ADP (private) payrolls report,” wrote Market Insights’ Michael Hewson. He said there would likely be a Thanksgiving-linked spike in hiring “that is not entirely representative of recent slower trends in the US labour market”.
“While a big jump in payrolls in November could be construed as a positive signal for the US labour market, it might not be enough to stop the Fed from cutting rates again with another close decision expected on Dec 10,” he added.
Source: CNA
