Most Asian stocks moved higher on Monday, recovering part of their recent losses as renewed expectations of a U.S. Federal Reserve rate cut in December supported sentiment.
Buying interest returned to beaten-down technology shares, with investors stepping back into the sector after weeks of sharp declines. However, overall trading activity in the region was subdued due to a holiday in Japan.
Chinese markets underperformed. Local chipmaking stocks slid sharply after reports suggested the U.S. was considering allowing NVIDIA Corporation (NASDAQ: NVDA) to resume sales of an advanced chip in China.
Airline shares were also under pressure following reports that Chinese travelers canceled thousands of flights to Japan amid rising diplomatic tensions between Beijing and Tokyo.
Asian markets tracked the positive tone on Wall Street from Friday, where dovish comments from several Fed officials boosted risk appetite. S&P 500 futures rose 0.4%, adding to hopes of a broader market recovery.
Asia stocks rise as December rate cut bets strengthen
Regional markets advanced across the board, with Australia’s ASX 200 rising 1%, while Singapore’s Straits Times Index added 0.4%.
India’s Nifty 50 climbed 0.3%, and Hong Kong’s Hang Seng jumped 1.6% on gains in major tech names.
South Korea’s KOSPI initially rose 1.5% before trimming gains to trade 0.2% higher.
The rally was driven largely by growing confidence in a December Fed rate cut. New York Fed President John Williams signaled support for a cut next month, helping push expectations sharply higher.
The CME FedWatch Tool showed traders pricing in a 67.3% chance of a 25-basis-point cut, up from 39.8% the previous week.
Markets now await several delayed U.S. economic reports for September, including inflation and labor-market data, which are expected to provide further insight into economic conditions. But the absence of October figures continues to leave policymakers lacking full visibility going into the early-December Fed meeting.
Lower interest rates are generally seen as positive for equities, as they increase liquidity and encourage investment in risk-sensitive assets.
China lags as chipmakers fall on Nvidia report
Chinese equities trailed the region due to sharp declines in semiconductor stocks and lingering doubts over potential new stimulus measures from Beijing.
The Shanghai Shenzhen CSI 300 and the Shanghai Composite both fell around 0.3%. Hong Kong gains were also capped by weakness in chipmakers.
Semiconductor Manufacturing International Corp (HK:0981), China’s largest chipmaker, sank 7.2%, while AI chipmaker Cambricon Technologies Corp Ltd (SS:688256) dropped about 2%.
The declines followed reports that the Trump administration was considering allowing Nvidia to sell its H200 AI chip in China. Analysts fear such a move could hurt demand for domestic chips and undermine Beijing’s broader goal of technological self-sufficiency.
The H200 chip is estimated to be roughly twice as powerful as the H20 — the most advanced chip Nvidia is currently permitted to sell in China under U.S. export controls.
However, allowing Nvidia to supply more capable chips would benefit Chinese tech giants by enabling them to continue scaling their AI initiatives. Tencent (HK:0700) rose 0.7%.
Alibaba Group (HK:9988) gained 4% ahead of Tuesday’s earnings release, boosted by strong early adoption of its newly launched AI app, which hit 10 million downloads within a week.
Baidu Inc. (HK:9888) advanced nearly 2% after JPMorgan upgraded the stock to Overweight, citing strong potential in the company’s AI and cloud operations.
Despite today’s gains, Asian tech shares remain under significant pressure after weeks of heavy selling driven by concerns that the AI boom may have pushed valuations too far. Japanese and South Korean markets have been among the hardest hit.
Chinese airline stocks also fell after reports of widespread flight cancellations to Japan amid escalating political tensions between the two countries.
