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Investors bet on US rate cut this month

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Yen perks up on hopes of rate hike

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Economic data this week to take centre stage

By Ankur Banerjee

SINGAPORE, Dec 1 (Reuters) - Asian stocks made a steady

start on Monday to the final month of 2025 as U.S. rate-cut

optimism lifted risk sentiment ahead of economic data, while the

yen firmed, with investors weighing the prospect of a near-term

rate hike.

The spotlight in the currency market has been on the

Japanese yen, which strengthened to 155.64 per U.S.

dollar as Bank of Japan Governor Kazuo Ueda took the stage in

Nagoya, Japan with investors parsing his comments for cues on

the timing of the next hike.

Ueda said in a speech to business leaders that the central

bank will consider the "pros and cons" of raising interest rates

at its next policy meeting in December.

In stocks, MSCI's broadest index of Asia-Pacific shares

outside Japan was steady at 703.19, having

gained 23.5% so far this year and on course for its best annual

gain since 2017. Japan's Nikkei fell 1.3% in early

trading.

U.S. stock futures, though, were lower in Asian hours, while

Hong Kong's Hang Seng rose over 1% pushing Asian stocks

higher.

"The risk bulls roll into December feeling positive about

directional bias," said Chris Weston, head of research at

Pepperstone.

"As the clouds of worry that cast an ominous shadow over

markets through to mid-November gently dissipate, they give way

to new emotions - notably the fear of not participating and the

risk of underperforming benchmark targets."

Investor focus this week will be on U.S. economic releases

that cover manufacturing and services activity as well as

consumer sentiment.

"With the U.S. data void finally being filled and a busy

economic calendar ahead, December looks set to be a merry one

for volatility hunters," said Matt Simpson, senior market

analyst at StoneX in Brisbane.

Simpson said if the incoming data signal a slowdown without

tipping into recession then sentiment will likely stay buoyant

while the U.S. dollar weakens as it typically does at this time

of year.

The dollar index, which measures the U.S. currency

against six other rivals, was at 99.414, little changed on the

day. The index has dropped 8% this year with much of the losses

coming in the first half of the year.

CONSUMER SPENDING IN FOCUS

Investors will watch out for comments from Federal Reserve

Chair Jerome Powell later in the day as they look for clues on

what the Fed will do later this month.

Dovish comments from policymakers have convinced investors

that a rate cut is on the cards. Traders are pricing in an 87%

chance of a cut later in the month.

Attention will also be on early indications about holiday

consumer spending as data from Black Friday and Cyber Monday

retail sales events trickle in.

U.S. shoppers spent a record $11.8 billion online, up 9.1%

from 2024 on Black Friday, according to Adobe Analytics, which

tracks 1 trillion visits that shoppers make to online retail

websites.

Market focus has been on the yen for the last few weeks as

doubts over when the next interest rate hike will come and

worries over fiscal policies under Prime Minister Sanae Takaichi

have left the currency in the intervention zone.

Japan's finance minister said on Sunday that recent erratic

swings in the foreign exchange market and rapid yen weakening

are "clearly not driven by fundamentals", in yet another verbal

warning that so far has not helped slow the yen's decline.

In commodities, oil prices rose after OPEC+ agreed to leave

oil output levels unchanged for the first quarter of 2026 at its

meeting as the group slows its push to regain market share amid

fears of a looming supply glut.

Brent crude futures were 1% higher at $63.03 a

barrel. U.S. West Texas Intermediate crude was at $59.16

a barrel, up 0.99%.

(Reporting by Ankur Banerjee in Singapore; Editing by

Muralikumar Anantharaman)