Thailand and Taiwan led emerging Asian markets higher on Tuesday as investors stepped up bets on a U.S. Federal Reserve rate cut in December, after several officials signalled support for easing.
The MSCI emerging Asia index rose 1%, extending gains for a second session. Taiwan’s benchmark climbed 1.5%, while Bangkok shares advanced 1.1%.
Momentum across regional markets has picked up in the last two days after Fed Governor Christopher Waller said soft labour conditions justify another quarter-point cut next month.
Lower U.S. borrowing costs typically support open Asian economies by giving their central banks greater scope to trim domestic rates.
"If the Fed does cut in December, it would symbolically support the relative ease towards the market's perceived terminal Fed funds rate of 3%," said Chris Weston, head of research at Pepperstone.
Markets are pricing in an 81% chance of a reduction of 25 basis points at the December meeting, according to CME's FedWatch Tool, up from 42.4% last week.
U.S central bank officials are scheduled to meet on December 9 and 10. In Southeast Asia, stocks in Jakarta slipped 0.7% from their record-high levels touched on Monday.
The benchmark index in the Philippines fell 0.8% after rising as much as 0.7% earlier, to its highest level since late-October.
Singapore's benchmark index fell 0.3%, following a surprise uptick in the city-state's core inflation for October. Bank of America analysts now expect the Monetary Authority of Singapore to start normalisation as early as April instead of October 2026.
Asian currencies posted marginal gains, with the Malaysian ringgit and Indonesian rupiah up about 0.2% each, while the Philippine peso, Singapore dollar and Thai baht were little changed.
The South Korean won was last up 0.4% after scaling a more-than-seven-month low the previous day. The currency has shed about 9.2% since late June, when it touched its best level this year of 1,347.1 won per dollar.
"The KRW could be reaching levels where the National Pension Service (NPS) could step in," Maybank wrote.
The country's foreign-exchange authorities and the NPS met on Monday to establish a new body aimed at balancing currency-market stability with the fund’s profitability, which generally benefits from a weaker won.
HIGHLIGHTS:
** Thai October exports rise 5.7% y/y, below forecast
** Severe floods displace thousands in Thailand and Malaysia, at least 8 killed
** 'Return' to China not an option for Taiwan's people, premier says responding to Xi - Reuters
