Asian, European markets drop as traders temper rate cut bets

HONG KONG, Dec 5, 2023 (AFP) : Stocks fell Tuesday, extending the sell-off seen on Wall Street, with analysts warning November's rally fuelled by bets on interest rate cuts may have gone too far, forcing traders to take a step back.

Markets surged last month as data pointing to slowing inflation and softer job markets combined with a dovish turn by Federal Reserve officials to stoke expectations they will next year begin loosening monetary policy.

Those hopes were boosted Friday when Fed chief Jerome Powell said rates were "well into restrictive territory".

More than one percentage point of reductions through to next December have been priced in by futures traders, according to Bloomberg News.

But observers said the euphoria may have caused investors to get ahead of themselves and the next few weeks could be a little bumpy, while they remained broadly upbeat about the new year.