Asia, December 1, 2025 – Asian equities started the final month of 2025 on a steady note, supported by optimism over a potential U.S. interest rate cut, even as investors closely watched the Japanese yen for signs of a near-term Bank of Japan (BOJ) rate hike.

The yen strengthened to 155.64 per U.S. dollar after BOJ Governor Kazuo Ueda spoke to business leaders in Nagoya, stating that the central bank would weigh the “pros and cons” of raising interest rates at its December policy meeting.

In the stock market, MSCI’s broadest Asia-Pacific index outside Japan held steady at 703.19, on track for a 23.5% gain this year, its best annual performance since 2017. Japan’s Nikkei 225 slipped 1.3% in early trading, while Hong Kong’s Hang Seng Index rose more than 1%, helping lift broader regional sentiment.

Chris Weston, head of research at Pepperstone, said, “As the clouds of worry that weighed on markets through mid-November dissipate, investors are increasingly driven by the fear of missing out and underperforming benchmarks.”

Investor Focus on U.S. Data and Consumer Spending

Markets will closely monitor U.S. economic data this week, including manufacturing and services activity and consumer sentiment. Dovish comments from Federal Reserve officials have fueled expectations of a 25 basis-point rate cut later this month, with traders pricing in an 87% probability.

Attention is also on early indicators of holiday consumer spending, with Black Friday online sales hitting a record $11.8 billion, up 9.1% from 2024, according to Adobe Analytics.

Meanwhile, the U.S. dollar index (DXY) remained relatively unchanged at 99.414, having fallen roughly 8% year-to-date.

Yen Volatility Persists

The Japanese currency has been volatile amid market uncertainty over the timing of the next BOJ hike and concerns over fiscal policies under Prime Minister Sanae Takaichi. Japan’s finance minister recently warned that erratic swings in the yen are “not driven by fundamentals.”

Commodities

Oil prices rose following an OPEC+ agreement to maintain output levels in the first quarter of 2026, amid concerns of a potential supply glut. Brent crude gained 1% to $63.03 a barrel, while WTI rose 0.99% to $59.16 a barrel.