Asian Markets Mixed as Fed Rate Cut Bets Grow and Japan’s Nikkei Leads Gains

Asian stock markets traded mostly subdued on Thursday, mirroring the modest uptick seen on Wall Street as investors positioned themselves ahead of next week’s Federal Reserve meeting. Market sentiment remained cautiously optimistic, supported by growing expectations of a U.S. interest rate cut following a series of softer economic indicators.

U.S. stocks posted slight gains overnight, and futures were largely flat during Asian trading hours. The latest ADP private payrolls report signaled a notable cooldown in hiring, while the ISM services index pointed to a slowdown in the service sector. These weaker-than-expected data releases strengthened market conviction that the Fed will deliver a 25-basis-point rate cut on December 10, with traders pricing in nearly a 90% probability, according to the CME FedWatch tool. Investors now shift their attention to Friday’s PCE inflation report, a key gauge that could further shape monetary policy expectations.

Japan emerged as a regional standout, with the Nikkei 225 and TOPIX surging 1.6%, driven by strong demand for technology and semiconductor stocks. The rally contrasted with the more muted performance across most Asian markets, where sentiment was tempered by concerns over global growth, geopolitical tensions, and uncertainty surrounding U.S. fiscal policy and potential Fed leadership changes next year. Lingering gaps in economic data caused by earlier government shutdown disruptions also kept investors cautious.

China’s CSI 300 rose 0.3%, while the Shanghai Composite was little changed. Hong Kong’s Hang Seng inched up 0.2%, and India’s Nifty 50 added 0.3%. In contrast, South Korea’s KOSPI slipped 0.6%, and Singapore’s Straits Times Index dipped 0.2%.

In Australia, October trade data showed a slightly smaller-than-expected rise in the trade surplus as exports weakened on softer global demand. Still, the S&P/ASX 200 managed a 0.2% gain as markets digested the figures.