Asian markets fell on Wednesday, mirroring a sluggish session on Wall Street, as investors waited for the Federal Reserve’s latest policy decision. The central bank is widely expected to cut interest rates for a third straight meeting, but all eyes are on the post-meeting statement, Chair Jerome Powell’s press conference, and the “dot plot” forecast for 2026.Hong Kong’s HSI dipped 89 points or 0.35% to 25,344. Nikkei also slipped 177 points to 50,477. Shanghai and Shenzhen were down 0.72% and 0.56%, respectively. Meanwhile South Korea’s Kospi was up 0.19% to 4,151, at 9:15 AM IST. The week also brings earnings from tech heavyweights Oracle and Broadcom. These results are being closely monitored amid ongoing concerns over an AI-driven bubble that rattled markets last month. Following a tech-led slump in November, markets have recently rebounded, helped by weak jobs data that supported expectations for further reductions in borrowing costs. However, that optimism has moderated ahead of the Fed meeting amid speculation of a “hawkish cut,” which could reduce the likelihood of a fourth consecutive rate reduction. Tuesday’s data showed an unexpected rise in job openings, tempering expectations for multiple cuts next year. Markets now anticipate two reductions over the next 12 months, down from three. In New York, both the S&P 500 and Dow ended the day lower, setting the tone for Asian markets. Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Wellington, Jakarta, and Manila all closed in negative territory. Taipei saw a small gain, while Seoul remained flat. Despite this, some analysts remain hopeful the Fed may adopt a more dovish stance in 2026. Kevin Hassett, President Donald Trump’s top economic aide and the likely successor to Powell in May, indicated he sees significant scope for further rate cuts. Alongside the Fed developments, investors are awaiting Oracle and Broadcom’s earnings to gauge the health of the tech sector, particularly following major investments in artificial intelligence. While markets have been lifted over the past two years by AI enthusiasm, doubts have emerged over whether the returns on these huge investments will materialise as quickly as expected.
