HFMarkets (hfm.com): Market analysis services.

[HFM]

Date: 2nd December 2025.

Asian Markets Steady as BoJ Rate-Hike Signals Boost Global Yields and Trigger Bitcoin Drop.
 

Asian markets held steady on Tuesday following a volatile start to the week, as strong demand for Japanese government bonds helped stabilise sentiment after hawkish signals from the Bank of Japan unsettled global markets. Investors had been reacting to fresh expectations of a potential Bank of Japan rate hike, a shift that pushed global bond yields higher and weighed on risk assets.

A successful auction of 10-year Japanese government bonds offered some reassurance. Solid demand, particularly from domestic pension funds, signalled that investors still see value in JGBs even as Japanese bond yields rise to multi-year highs. This helped calm a market that has been on edge since Governor Kazuo Ueda’s recent comments revived speculation of policy tightening as early as this month.

The yen stabilised after Monday’s swings, and Japanese equities closed slightly higher, supported by financial stocks that typically benefit from higher interest rates. The backdrop of a weak yen and elevated import costs continues to place pressure on households and small businesses, further fuelling expectations that the BoJ may need to act sooner rather than later.

Carry Trade Risks in Focus as Investors Watch Yen Volatility

The renewed rise in global yields and the steady decline of the yen have also reignited discussions around the yen carry trade, a strategy where investors borrow yen cheaply to invest in higher-yielding assets abroad. While some fear that growing currency volatility could trigger an unwind, several economists noted that current market conditions do not yet suggest a large-scale reversal.

Asia-Pacific Markets Mixed After Wall Street Pullback

Across the wider region, Asian markets delivered a mixed performance. Hong Kong and South Korea posted notable gains, with the Kospi supported by strong demand for technology names such as Samsung Electronics and SK Hynix. Mainland Chinese shares were more subdued.

This followed a soft session on Wall Street, where major indices retreated as rising global bond yields reduced appetite for equities. Investors continue to reassess expectations for Federal Reserve policy, especially as US manufacturing data indicates ongoing pressure on hiring and supply chains.

Bitcoin Price Drops on Thin Liquidity and Macro Stress

Cryptocurrencies faced sharper declines. Bitcoin fell below key support levels in a fast, liquidity-driven drop that traders attributed to the combination of thin weekend markets and the sudden spike in global yields following the BoJ’s policy shift.

Another emerging concern is the pending MSCI methodology review that may affect companies with heavy crypto exposure on their balance sheets. A potential reclassification could force index funds to adjust positions, prompting capital outflows. Market participants say traders are already factoring in the possibility of such forced moves.

Despite broader market weakness, selective crypto ETFs, particularly those tracking Solana and XRP, continued to attract inflows. On-chain data also shows that leverage in the system has been gradually declining, which may help reduce future volatility even if short-term sentiment remains cautious.

Bank of England Loosens Capital Requirements as UK Banks Pass Stress Tests

In the UK, the Bank of England introduced a notable regulatory shift by lowering its benchmark for bank capital requirements, the first major adjustment since the post-2008 reforms. After major banks passed the latest stress tests with a comfortable buffer, the BoE signalled confidence in the sector’s resilience and encouraged lenders to support households and businesses more actively.

The central bank also noted that capital requirements in the UK remain comparatively high relative to the US and EU, prompting a review of leverage rules. The move has been welcomed by banks and is expected to support credit conditions in the coming year.

UK Pension Funds Reduce US Equity Exposure Amid Tech Concentration Risks

Meanwhile, several large UK pension schemes managing more than £200bn have been reducing their exposure to US equities. The rapid rise of the Nasdaq, driven largely by a handful of megacap technology companies, has raised concerns about concentration risk and the possibility of an AI-fuelled valuation bubble.

To safeguard retirement savers, many funds have diversified into other regions or added hedging strategies to mitigate the risk of sharp corrections in overvalued sectors.

Outlook: December Set to Shape Global Market Direction

Looking ahead, investors expect December to be a defining month for global markets.

• The Bank of Japan’s rate decision will be crucial for yen stability and Asian markets.
• The Federal Reserve meeting could confirm whether rate cuts are nearing.
• Crypto markets remain sensitive to potential MSCI-related reclassifications.
• UK banks will be adjusting to new capital rules.

For now, the easing of JGB volatility and selective gains across Asian equities provide a measure of stability. But with rising global yields, currency swings, and fragile liquidity in several asset classes, markets remain braced for further shifts as year-end approaches.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

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Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

[HFM]

Date: 4th December 2025.

Global Markets Update: US Data Fuels Rate-Cut Hopes as Japan Edges Toward Tightening.
 

US markets continued to react positively to signs of a cooling labour market on Wednesday, as a surprisingly weak ADP employment report reinforced expectations that the Federal Reserve could deliver another 25 bp rate cut at its 10 December meeting. ADP private payrolls fell by 32,000, far below forecasts, adding to speculation that policymakers may feel comfortable easing again.

The data helped extend the rally in Treasuries. Yields erased their overnight gains and moved lower across the curve, with the 2-year declining to 3.483%, back below the 3.50% threshold, while the 10-year slipped to 4.058%. The drop in yields provided a tailwind for equities:
 

• Dow Jones: +0.86%, approaching its record high from mid-November
• S&P 500: +0.30%
• Nasdaq: +0.17%, held back by early weakness in big tech

Microsoft was a notable drag after reports suggested the company had reduced AI-related sales targets, though later denials helped the stock stabilise. Meanwhile, the latest ISM Services PMI painted a mixed picture but did little to change expectations for policy easing next week.
 

Asia: Markets Mixed as Bank of Japan Prepares to Shift Gears

Asian equities delivered a mixed performance on Thursday, even as US markets hovered near record highs. The focus in the region centred squarely on Japan, where Bank of Japan Governor Kazuo Ueda has been quietly preparing political leaders for the country’s first rate hike in years.

Ueda reportedly stressed the risks of a persistently weak yen and rising inflation during discussions with Prime Minister Sanae Takaichi, who just last year referred to rate hikes as ‘stupid.’ The diplomatic effort appears to have worked, markets now view a December hike to 0.75% as almost certain and believe political resistance to tightening is diminishing.

However, the bigger uncertainty lies in the BOJ’s long-term rate trajectory, particularly as there is little clarity around where Japan’s neutral interest rate sits. The uneasy balance between political expectations and monetary policy will likely keep Japan’s bond market volatile.
 

Japanese Bond Yields Hit 17-Year Highs

The shift in expectations has pushed the 10-year JGB yield to 1.92%, its highest level since 2007. Analysts warn that yields near these levels may prompt Japanese banks to revisit their long-term bond strategies.

The move comes amid broader global bond-market jitters and ahead of the BOJ’s key meeting on 18-19 December.
 

• 30-year JGB yield briefly touched 3.44%, a record high, before easing after a well-received government auction.
• Strong demand came from pension funds and foreign investors, even as domestic insurers remained cautious.

 

 

Asia-Pacific Market Snapshot

• Nikkei 225: +2.3% to 51,028.42, approaching its all-time high.
  Gains were supported both by expectations of a Fed rate cut and speculation about BOJ tightening.
• SoftBank Group: +9.2% after its founder reiterated plans to prioritise AI investments following the exit from Nvidia.
  Despite the jump, shares remain down nearly 28% over the past month.
• Hang Seng: +0.5%, reversing earlier losses on strength in tech and consumer stocks.
• Shanghai Composite: −0.1%
• Kospi: −0.2%, as tech and autos weighed on the index
• ASX 200: +0.3%, recovering mid-session
• Taiex: flat
• India Sensex: +0.2%

US futures were slightly higher in early Thursday trading.
 

US Market Recap: Stocks Edge Closer to Records

The broader US market continued edging towards new highs:
 

• S&P 500: +0.30%, now within 0.6% of its record
• Dow Jones: +0.9%
• Nasdaq: +0.2%

Semiconductor names led the charge, Microchip Technology surged 12.2% after forecasting stronger-than-expected profit and sales, and Marvell Technology rose nearly 8% on solid earnings.

Treasury yields continued to ease: the 10-year slipped to 4.06%, extending the move lower sparked by the weak ADP report.

Bitcoin also rebounded strongly, climbing back above $93,000 after last month’s slide below $81,000.

Oil prices firmed modestly early Thursday:
 

• WTI crude: $59.40 (+$0.45)
• Brent: $63.07 (+$0.40)

The US dollar softened slightly, slipping against major currencies except the yen.
 

FX Market Spotlight: Sterling Surges on Strong UK Data

The British pound delivered its strongest one-day rally since April, jumping 1.1% against the US dollar on Wednesday. Sterling held those gains early Thursday, trading near $1.335, its highest level in over a month.

The move came as UK business activity surprised to the upside:
 

• UK Composite PMI (Nov): 51.2 (forecast: 50.5)

The upbeat data supported the view that economic momentum is stabilising, easing concerns surrounding last week’s Budget. Strategists at Bank of America and MUFG highlighted that the rally reflected both stronger data and the unwinding of negative positions built up ahead of the Budget announcement.

The dollar’s softness was amplified by the weak US payrolls data and renewed speculation around the Federal Reserve leadership, after President Trump signalled that Kevin Hassett may be nominated as the next Fed Chair, fuelling expectations of faster rate cuts. The DXY fell 0.5% on the day.


 

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.