TOKYO, Dec 3 (Reuters): Asian stocks jumped on Tuesday led by an outperforming tech sector following record highs on Wall Street overnight, while the dollar recovered lost ground against major rivals as traders weighed the outlook for US interest rates.
Investors were also monitoring the political turmoil in France as the government there teetered on the brink of collapse, leaving the euro languishing close to a one-week low.
The Chinese yuan faced its own challenges from the growing threat of more US tariffs on China, pushing it down to a 13-month trough.
Japan's tech-heavy Nikkei, rallied 2.2 per cent in afternoon trade, and South Korea's KOSPI, advanced 1.8 per cent. Taiwanese shares, gained 1.4 per cent.
Australia's stocks benchmark, rose 0.6 per cent and reached a fresh all-time high. Singapore's Straits Times index, rose more than 1 per cent to a 17-year peak.
However, Chinese stocks were heavy, with Hong Kong's Hang Seng, managing only a 0.1 per cent rise and mainland blue chips, falling 0.4 per cent.
MSCI's broadest index of Asia-Pacific shares, added 1 per cent.
Both S&P 500 and Nasdaq futures , pointed slightly higher after the cash indexes renewed their record peaks on Monday, helped by strong gains for most of the so-called Magnificent 7 high-tech stocks, including a 3 per cent rally in both Facebook parent Meta Platforms, and Tesla.
"Equity hedges have been unwound, which speaks to a market confident of a grind higher into year-end," said Chris Weston, head of research at Pepperstone, referring to the bull run for US equities, and particularly the "MAG7".
"Microsoft and Meta would be my picks that lead us higher from here."
Microsoft, advanced 1.8 per cent overnight. The other "MAG7" stocks are Google parent Alphabet, Amazon, Apple, and Nvidia.
Pan-European STOXX 50 futures shook off France's political woes to advance 0.4 per cent.
In currencies, the US dollar added 0.4 per cent to 150.10 yen , trying to put some distance from Monday's low of 149.09, the weakest level since Oct. 21.
The dollar received some support overnight from better-than-expected US manufacturing data, which also showed a mitigation in price increases. However, the greenback came under renewed pressure as Federal Reserve Governor Christopher Waller said he is "leaning toward" a rate cut on Dec. 18.
Traders currently see about a 75 per cent chance of a quarter-point cut at this month's Fed meeting, up from 66 per cent a day earlier and 52 per cent a week ago, CME's FedWatch Tool showed.
The two-year US Treasury yield dipped to 4.1877 per cent on Tuesday, heading back towards the four-week low of 4.1550 per cent from Friday.
JOLTS job openings - a preferred gauge of Fed officials - is due later on Tuesday, ahead of the monthly payrolls figures on Friday.
The yen, meanwhile, has been supported by rising speculation that the Bank of Japan will raise rates by a quarter point on Dec. 19, with traders currently putting the odds at around 58 per cent.
"Providing USD/JPY remains below the 151/152 resistance zone, the risks are for a deeper decline towards 145.00, which may prove too conservative if the BOJ hikes rates and the Fed cut rates," said Tony Sycamore, an analyst at IG.
The euro eased 0.1 per cent to $1.0489, after dropping about 0.7 per cent overnight and hitting lows of $1.046125.
The French government appeared all but certain to collapse later this week after far-right and left-wing parties submitted no-confidence motions on Monday against Prime Minister Michel Barnier.
Sterling fell 0.1 per cent to $1.2646.
The yuan sank as low as 7.3145 per dollar in offshore trading , the weakest since November of last year.
US President-elect Donald Trump demanded at the weekend that BRICS member countries - which include China - commit to not creating a new currency or supporting another currency to replace the dollar. He said they would otherwise face 100 per cent tariffs.
Less than a week earlier, Trump said he would hit China with an additional 10 per cent levy on top of a campaign pledge of tariffs in excess of 60 per cent on Chinese goods.
Gold remained mired around $2,640, following its retreat from an all-time peak of $2,790.15 on Oct. 1.
Oil prices were little changed near two-week lows as traders awaited the outcome of an OPEC+ meeting later this week.
Brent crude futures added 12 cents to $71.95 per barrel and US West Texas Intermediate crude rose 5 cents to $68.15 per barrel.
Turkey inflation higher than expected, teeing up tough rate decision
ISTANBUL, Oct 3 (Reuters): Turkey's annual inflation fell to 49.38 per cent in September whereas the monthly rate was much higher than expected at nearly 3 per cent, prompting a note of caution from the central bank and setting the stage for later than expected interest rate cuts.
At 50 per cent, the central bank's policy rate is now higher than the annual consumer price index (CPI) for the first time since 2021, marking a milestone in an aggressive tightening cycle meant to correct years of easy money and soaring prices.
But after the surprisingly high price measures last month, boosted in part by education-related costs, Central Bank Governor Fatih Karahan said there remains "some
distance to cover" before achieving the bank's two main inflation goals.
Addressing parliament after the data was released on Thursday, Karahan said the two conditions were: a significant and permanent decrease in the main trend of monthly inflation, and the convergence of expectations to the bank's own forecast range.
The lira was slightly firmer at 34.18 against the dollar.
Some analysts said the bank was unlikely to be able to ease policy until December at the earliest and perhaps not until next year.
Wall Street bank JPMorgan said it expected easing to begin in January, after having earlier predicted November. Capital Economics said a rate cut this year looks "very unlikely".
Month-on-month inflation was 2.97 per cent, according to the Turkish Statistical Institute, a Reuters poll forecast of 2.2 per cent. Annual CPI was also higher than the poll forecast of 48.3 per cent.
In August, monthly CPI was 2.47 per cent, with the annual rate at 51.97 per cent. The central bank is closely watching the monthly rate for signals of when to begin easing, though it has only dipped below 2 per cent once this year, in June.
Last month, a Reuters poll showed a growing minority of analysts expecting a first cut next year, with the consensus settled around November and expectations of at least 20 points of easing by the end of 2025.
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