Asia markets end mostly mixed as Fed signals cuts next year

Oil prices continued to rise after energy firms pulled a bigger than expected 4.3 million barrels of crude from stockpiles for the week ended Dec. 8.

Contracts for West Texas Intermediate in January continued to gain 0.88% to trade at
$70.08 on Thursday, while Brent crude advanced almost 1% to trade at $74.93.

On Wednesday, the WTI contract finished 1.3% up at $69.47, while Brent was up 1.02% to $74.26.

— Lim Hui Jie

Australia's unemployment rate rose to 3.9% in November, up from October's revised 3.8%.

It is the country's highest rate since May 2022, and more than the 3.8% expected by economists polled by Reuters.

The country's employment-to-population ratio returned to a record high of 64.6%, while the participation rate hit a new high of 67.2%, beating Reuters expectations of 66.9%. The participation rate refers to the number of people in the labor force as a percentage of the working age population.

— Lim Hui Jie

Australian markets are pricing in 50 basis points of cuts in 2024, according to Tony Sycamore, analyst at research firm IG.

The Australian interest rate market has pulled forward expectations for the first rate cut of 25 basis points by the country's central bank next year to June from November, following the "dovish" Fed's rate decision, Sycamore said in a note.

A second rate cut of 25 basis points is also "fully priced" by November 2024, he added.

The RBA's benchmark interest rate stands at 4.35%. The central bank held rates in its last meeting on Dec. 5.

— Lim Hui Jie

The Japanese yen strengthened against a weaker dollar Thursday after the U.S. Federal Reserve took a definitive stance on ending rate hikes and signaling cuts through next year.

The yen rose 0.2% to around 142 against the dollar, hitting its highest point in a week.

The Fed held its main lending rate at the 5.25%-5.5% range, while signaling that committee members penciled in at least three rate cuts in 2024, assuming quarter percentage point decreases.

The dollar sank nearly 1% against a basket of currencies following the decision.

Japan markets will now look toward the Bank of Japan's move on interest rates next week. Markets are hopeful that the country's central bank may not raise interest rates in that monetary policy meeting.

The Nikkei 225 rose 0.42% by the open.

— Shreyashi Sanyal

Citi highlighted opportunities in three stocks after Argentina devalued its currency by 50%

The drastic devaluation was part of a new economic plan announced by libertarian President Javier Milei, who took office earlier this week. One U.S. dollar will now fetch 800 Argentine pesos, up from 400 pesos earlier.

The U.S.-listed shares of two Argentine companies have also run up by more than 40% since Milei's election, on hopes of an economic turnaround.

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— Ganesh Rao

The boom in weight loss drugs has made pharmaceutical giant Novo Nordisk favorable to many investors this year – but one investment bank has reservations on the stock.

"Over the coming year, we envisage sentiment to change, perhaps initially as a result of the launch of competitor Eli Lilly's anti-obesity drug Zepbound and the risk of disappointment from slower than anticipated Wegovy supply ramp-up," Jefferies' analysts led by Peter Welford wrote in a Dec. 7 equity research note.

But not everyone agrees, with other analysts being bullish on the stock.

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— Amala Balakrishner

Oil prices on Wednesday rose after a larger-than-expected withdrawal from U.S. crude inventories and as the Federal Reserve signaled several rate cuts in 2024.

Brent crude futures for February rose $1.02, or 1.39%, to settle at $74.26 a barrel. U.S. West Texas Intermediate crude futures for January gained 86 cents, or 1.25%, to settle at $69.47 a barrel.

The U.S. Energy Information Administration said energy firms pulled 4.3 million barrels of crude from stockpiles during the week ended Dec. 8, much larger than a Reuters poll of a 700,000 barrel withdrawal.

On Tuesday, both Brent and WTI closed at their lowest since June 27, largely on fears that a slight rise in inflation last month would mean the Federal Reserve is not ready to let up on rates yet.

But the Fed eased those worries on Wednesday, holding rates steady and indicating three cuts were coming in 2024. Higher interest rates can slow demand and put pressure on oil prices.

— Spencer Kimball

The Dow Jones Industrial Average soared more than 400 points, more than 1%, to surpass the 37,000 threshold for the first time as investors embraced the Federal Reserve's outlook for rate cuts.

At its highest level for the day, the 30-stock Dow hit 37,035.07.

The S&P 500 surpassed the 4700 level, gaining 1.4%, while the Nasdaq Composite jumped 1.45%.

-Darla Mercado

Central bankers think the labor market is finally easing into a sweet spot.

"Overall, the development of the labor market has been very positive. It's been a good time for workers to find jobs and get solid wage increases." Federal Reserve Chair Jerome Powell said during a press conference on Wednesday.

"You see job growth still strong but moving back down to more sustainable levels given population growth and labor force participation," Powell said, adding that the "era of this frantic labor shortage is behind us." Wages are still running higher than what would be consistent with 2% inflation—the Fed's target inflation level—over a long period of time, but have gradually been cooling off, he added.

Payrolls grew faster than expected in November while the unemployment rate fell.

— Pia Singh

The Federal Reserve is willing to cut rates even if the U.S. economy doesn't dip into a recession in 2024, Chair Jerome Powell said.

"It could just be a sign that the economy is normalizing and doesn't need the tight policy," he said.

Powell also said that the Fed is now seeing progress on inflation across the three main core areas.

The comments could ease concerns that the projected rate cuts reflect a split opinion on the economy by the Fed members.

"Overall, they seem to be in-tune with economic realities, which is encouraging as we enter a new chapter of the Fed reaction function," Dylan Kremer, chief investment officer for Certuity, said in an email.

— Jesse Pound