Asian Stocks Rally as Fed Rate-Cut Bets Rise; Tech Leads Rebound Despite Nvidia Jitters

Most Asian equities advanced sharply on Wednesday as markets priced in a higher probability that the U.S. Federal Reserve will cut interest rates in December, with technology shares leading gains after rebounding from recent declines.

Regional bourses took a positive lead from Wall Street, where a run of middling U.S. data reinforced expectations of a December cut. Two Fed officials have publicly backed additional easing since Friday, further boosting sentiment. U.S. equity futures tracked the improved risk tone, with S&P 500 futures up 0.3% by 23:25 ET (04:25 GMT).

In Asia, tech stocks were the main driver of gains, even as sentiment toward Nvidia (NASDAQ:NVDA) remained fragile. The chipmaker slid to a two-month low overnight following reports that Google (NASDAQ:GOOGL) is developing its own artificial intelligence chips, potentially challenging Nvidia’s dominant position in AI hardware.

Japan’s Nikkei 225 and South Korea’s KOSPI were among the region’s top performers, each rising about 2% on a strong rebound in technology names. Japan’s broader TOPIX index added 1.9%, supported by fresh buying in industrials and energy stocks with exposure to the AI theme. Chipmaking, electronics and data-center related stocks advanced broadly amid renewed optimism that AI-related capital spending will remain robust in the coming quarters.

Japanese tech conglomerate SoftBank Group (TYO:9984) surged 6.3%, snapping a sharp two-session losing streak in which it had dropped around 10% on concerns over its exposure to OpenAI and increasing competition from Google. Elsewhere in Japan, Nvidia supplier Ibiden Co. (TYO:4062) fell 5.2% after a downgrade to Equal Weight by Morgan Stanley, while components maker Murata Manufacturing (TYO:6981) climbed 2.8% following an upgrade to Overweight.

While questions over Nvidia’s valuation and funding structure persist, tech sentiment drew support from Alphabet’s recent run of record highs as the company reportedly prepares its own processors, underscoring confidence in the broader AI investment cycle.

Rate-cut optimism was reflected in money markets, where traders are now pricing in an 82.7% chance of a 25-basis-point cut at the Fed’s December 9–10 meeting, up sharply from 43.4% a week earlier, according to CME’s FedWatch tool.

In Australia, the ASX 200 rose 0.9%, with heavyweight banks and miners driving gains. The advance came despite hotter-than-expected October consumer inflation, which effectively erased expectations for further near-term rate cuts by the Reserve Bank of Australia. Headline CPI rose 3.8% in October, above forecasts, while underlying inflation also quickened amid surging rents and electricity prices. The upside surprise prompted some economists to warn that the RBA may delay any additional easing until the second half of 2026.

Hong Kong’s Hang Seng index lagged its regional peers, pressured by a 1.5% drop in Alibaba Group shares after the e-commerce giant reported mixed fiscal second-quarter results. Although revenue and profit topped expectations, investors focused on deteriorating margins as Alibaba continued to spend heavily on consumer subsidies and its AI strategy. By contrast, food-delivery platform Meituan (HK:3690), a key competitor to Alibaba, jumped more than 6%, making it one of the best performers on the Hang Seng.

Mainland Chinese markets registered more modest gains. The CSI 300 rose 0.8%, while the Shanghai Composite edged up 0.1%. Sentiment towards China remained cautious as the U.S. was seen stepping into an escalating diplomatic row between Beijing and Tokyo. Renewed concerns over China’s struggling property sector also weighed on risk appetite, particularly as confidence in developer China Vanke (HK:2202) has deteriorated, with its bonds coming under intense selling pressure in recent weeks.

Still, reports of a call between U.S. President Donald Trump and Chinese President Xi Jinping offered some hope of improving U.S.–China ties, following earlier signs of thawing relations.

Across the broader region, Singapore’s Straits Times index rose 0.6%, while India’s Nifty 50 gained 0.7% in early trade, reflecting the broader risk-on mood tied to rising expectations of Fed policy easing.