Dovish Fed speeches dramatically increased the odds of a December rate cut to 80%, sparking a strong rebound in US equities. The rally was tempered by news of Meta Platforms' multi-billion-dollar deal to purchase Google's TPUs, intensifying competitive pressures on NVIDIA. Asia markets were mixed
Fed rate cut for December restored, US stocks rallied, US dollar muted
Key takeaways
- Dovish Fed signals ignited a major repricing of rate-cut expectations, driving the odds of a 25-bps cut at the 10 December FOMC meeting up to 80% and pulling forward additional cuts across 2025–2026.
- US equities, especially mega-cap tech and AI names, rebounded strongly, fuelled by revived risk appetite despite lingering competitive pressures on Nvidia from Google’s TPU deal talks with Meta.
- Asia-Pacific markets and FX responded mixed, with the Hang Seng bouncing on China tech optimism, while USD strength stalled and JPY firmed amid renewed intervention fears.
Back-to-back dovish speeches by two key Federal Reserve officials, Vice Chair Williams and Governor Waller, which supported a December rate cut, triggered a reversal in the odds of a 25-basis-point (bps) cut on the Fed funds rate in the upcoming 10 December FOMC meeting.
Based on the latest data from the CME FedWatch tool, the chances of a 25-bps cut on the 10 December FOMC meeting have increased significantly to 80% from odds of 30%-40% printed last week. Also, Fed funds futures traders have also priced at least three more rate cuts in 2025 of 25 bps each to bring the Fed fund rate lower to 2.75%-3.00% by the end of 2026 from the current rate of 3.75%-4.00%
This dovish repricing of Fed rate cut odds has triggered a wave of bullish animal spirits back into the US stock market, especially on the technology and artificial intelligence (AI) stocks that were battered down in the past two weeks due to AI bubble fears and Nvidia’s lacklustre share price reactions after it managed to smash earnings expectations.
US stocks rallied for the second consecutive session on Monday, 24 November, led by the mega-cap technology stocks, where the Nasdaq 100 outperformed with a gain of 2.6% followed by the small-cap Russell 2000 (+1.9%) and the S&P 500 (+1.6%). The Dow Jones Industrial Average trailed behind with a modest rally of 0.4% dragged down by the underperformance of financials and healthcare sectors.
In today’s Asia session, the S&P 500 and Nasdaq 100 E-mini futures shed -0.04% and -0.07% respectively after Nvidia experienced a sudden drop of 1.5% in the after-hours trading session in reaction to a news flow that highlighted that Meta Platforms is in talks to spend billions on Google's AI chips, known as tensor processing units (TPUs) to use in data centres in 2027.
Hence, such an agreement between Meta Platforms and Google would help establish TPUs as an alternative to Nvidia's chips, dampening the revenue growth prospects of Nvidia’s current crown jewel, the Blackwell GPU.
Hong Kong’s Hang Seng Index staged a late bullish comeback rally on Monday, 24 November, that snapped its prior six consecutive sessions of bearish movement with a rally of 2%, its best daily performance in almost two weeks, on the backdrop of optimism in Chinese Big Tech stocks triggered by Alibaba.
Alibaba reported that its latest revamped AI’s Qwen app drew more than 10 million downloads and announced plans to integrate core lifestyle and productivity services into the Qwen app, boding well for a longer-term effort to build a rival to US-based OpenAI’s ChatGPT.
In today’s Asia session, Asia Pacific stock markets delivered a mixed performance. Hong Kong’s Hang Seng Index extended its rebound with an intraday gain of 0.6%, while Japan’s Nikkei 225, reopening after yesterday’s holiday, traded largely flat. Australia’s ASX 200 edged up 0.1%, whereas Singapore’s Straits Times Index lagged with an intraday decline of 0.4%.
In the FX market, the strength seen in the US dollar in the past two weeks has stalled for the third consecutive session, reinforced by the latest dovish repricing of Fed rate cut bets.
The US Dollar Index has been stuck in a narrow 0.3%–0.4% range since Thursday, 20 November, holding below the key medium-term resistance at 100.54. In today’s Asia session, the Japanese yen is leading major currencies with an intraday gain of 0.2% against the dollar, supported by persistent FX intervention fears by Japanese authorities as USD/JPY hovers just under the 158.00/158.35 short-term resistance zone.
Our YouTube video above contains the latest intraday technical analysis on the US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
