Asian stocks declined on Tuesday as investors positioned themselves ahead of a widely expected U.S. Federal Reserve interest rate cut later this week. Market sentiment remained cautious amid a packed schedule of global central bank meetings, including decisions from the Reserve Bank of Australia (RBA), Swiss National Bank (SNB), and Bank of Canada. All three are anticipated to keep rates unchanged, while the Fed is expected to lower borrowing costs on Wednesday.
The bigger question for markets is the Fed’s policy path beyond December. Bond investors are preparing for a more modest easing cycle, with many major Wall Street banks forecasting fewer rate cuts in 2026 due to persistent inflation pressures and a resilient U.S. economy. As a result, equities have struggled for direction, with MSCI’s broadest index of Asia-Pacific shares outside Japan slipping 0.28%. Japan’s Nikkei dipped 0.08%, and South Korea’s Kospi fell 0.58%.
Analysts expect a cautious tone from Fed Chair Jerome Powell. TD Securities strategist Prashant Newnaha noted that the “low-hanging fruit” of policy adjustments may be over, adding that the Fed’s dot plot could show just one rate cut in 2026. Traders currently price in roughly 77 basis points of easing next year, according to LSEG data. The meeting also draws added attention as speculation grows over Powell’s potential successor, with White House Economic Adviser Kevin Hassett—considered a top contender—advocating continued rate reductions.
Asian chip stocks were volatile after U.S. President Donald Trump announced that Nvidia’s H200 AI processors would be allowed for export to China with a 25% fee. China’s CSI Semiconductor Index dropped nearly 1%.
Currency markets were steady, with the dollar holding firm and the euro trading near $1.1640. The yen stabilized after briefly weakening following a 7.5-magnitude earthquake in northeastern Japan that injured dozens and prompted mass evacuations.
Gold edged up 0.13% to $4,194.11 per ounce, while oil prices were flat as traders monitored peace negotiations aimed at ending the war in Ukraine.


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