- Asian stocks rise following third day of gains for S&P 500
- Oil stabilises after fall on signs of Ukraine-Russia peace deal
- Sterling advances ahead of UK budget
SINGAPORE, Nov 26 (Reuters) - Asian stocks rose on Wednesday, chasing gains on Wall Street as weaker-than-expected economic data spurred expectations that the Federal Reserve will cut interest rates at its policy meeting next month.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.1%, after U.S. stocks ended the previous session with mild gains. Japan's Nikkei stock index tacked on 1.9%, while U.S. stock futures climbed 0.3%.
U.S. stocks reclaimed lost ground after a selloff earlier this month, with the S&P 500 and Nasdaq Composite rising for a third consecutive day on Tuesday after data showed retail sales rose less than expected and consumer confidence weakened.
The prints firmed up expectations that the Fed will ease policy soon and prompted speculation that some emerging market Asian central banks could follow.
"Once we start seeing more cuts from the U.S., that's positive for our region," said Sat Duhra, a portfolio manager at Janus Henderson Investors. "These markets want to see that before we start getting more aggressive on rate cuts."
Fed funds futures are pricing an implied 80.7% probability of a 25-basis-point cut at the U.S. central bank's next meeting on December 10, compared to even odds a week ago, according to the CME Group's FedWatch tool.
The yield on benchmark 10-year Treasury notes rose to 4.0113% compared to the U.S. close of 4.002% after briefly breaking below the 4% threshold on Tuesday for the first time this month. Sterling was last trading 0.2% firmer at $1.3188 to extend its advance into a fifth day ahead of the UK government's budget, due later on Wednesday.
Finance Minister Rachel Reeves will likely announce new tax increases in an attempt to maintain the confidence of financial markets against an expected downgrade of Britain's economic prospects. In early European trades, pan-region futures were up 0.7%, German DAX futures were up 0.7%, and FTSE futures were up 0.3%.
Oil prices steadied, with Brent crude futures rising 0.4% to $62.72, after U.S. President Donald Trump backed away from a Thursday deadline for Ukraine to agree to a U.S.-backed peace plan.
Trump also shrugged off a Bloomberg News report that U.S. negotiator Steve Witkoff coached the Russians on how to approach him on the topic.
Earlier, crude prices had slid as President Volodymyr Zelenskiy said Ukraine was ready to advance the U.S.-backed plan, potentially paving the way for an unwinding of Western sanctions on Moscow's energy trade and adding more supply to the market.
That had pushed oil futures to a five-week low on Tuesday, while European energy prices reached the lowest in a year-and-a-half.
OPEC+ is meeting on Sunday and is likely to leave output levels unchanged, three OPEC+ sources said.
The European single currency edged 0.1% higher on the day at $1.1586.
The dollar was steady against the yen at 156.045 , with the Japanese currency veering between gains and losses as sources told Reuters that the Bank of Japan is preparing markets for a possible interest rate hike as soon as next month, shifting the central bank onto a hawkish footing after a meeting last week between new Prime Minister Sanae Takaichi and BOJ Governor Kazuo Ueda.
Takaichi's high approval ratings are prompting Japanese opposition parties to ramp up preparations for snap elections, the Yomiuri newspaper reported on Wednesday.
Japanese government bonds extended losses, with short-term yields reaching the highest levels since the midst of the global financial crisis in June 2008.
The dollar index , which tracks the greenback against a basket of currencies of other major trading partners, slid 0.2% to 99.686.
The New Zealand dollar surged 1.3% to $0.5691 after the Reserve Bank of New Zealand cut benchmark interest rates by 25 basis points to 2.25% and reined in its earlier dovish guidance.
Australian shares gained 0.8% and the Australian dollar strengthened 0.6% after consumer prices rose at a faster-than-expected pace in October, reinforcing bets that the central bank's easing cycle could be over.
Spot gold was trading up 0.8% at $4,163.58 per ounce, while bitcoin rose 0.4% to $87,340.98.
Reporting by Gregor Stuart Hunter; Editing by Jacqueline Wong and Lincoln Feast.
Source: Reuters