US stock futures rose alongside Asian shares after a volatile week, amid growing optimism about the likelihood of the Federal Reserve cutting interest rates.
S&P 500 futures rose 0.4% at the start of the week, after the benchmark index ended Friday's session higher following a turbulent period marked by sell-offs in riskier assets.
Nasdaq 100 futures rose 0.6%. Stocks also advanced in Hong Kong, Australia, and South Korea, while the market in mainland China remained flat. Japanese markets were closed for a public holiday.
Oil prices retreated after posting their biggest weekly loss since early October, as traders assessed the likelihood of a peace deal between Ukraine and Russia that could increase crude flows to a market facing a supply glut. Gold edged lower for a third straight day.
Risk appetite improved on Wall Street
Risk appetite improved on Wall Street following reports on Friday that U.S. officials had held preliminary talks about allowing Nvidia to sell its H200 artificial intelligence chips to China. The market also received a boost after New York Federal Reserve President John Williams hinted at a possible interest rate cut in the near term.
Wall Street ended a turbulent week as stocks turned higher after a sell-off shook some of the market's most speculative assets, testing investors' nerves after a strong rally.
Nick Tweedall, senior analyst at AT Global Markets, said: “Given the moves we’ve seen last week, and the likelihood of continued volatility in the coming days, it would be natural for investors to be hesitant to bet heavily on positive risk sentiment.”
Sharp fluctuations shake the markets, and all eyes are on the Federal Reserve.
Markets saw a sharp return to volatility last week as doubts grew about the Federal Reserve's ability to cut interest rates, unsettling investors. Favorite assets among retail traders, including cryptocurrencies and AI-related stocks, fluctuated wildly, while a sell-off in Asian tech stocks pushed the MSCI Asia Pacific Index to its biggest weekly decline since April.
Treasury bonds rose on Friday after Williams, seen as a close ally of Federal Reserve Chairman Jerome Powell, said he saw room for near-term monetary policy easing, with the risks of declining employment increasing and the risks of rising inflation receding.
While traders increased their bets on an interest rate cut in December, officials remained divided over the move, with Boston Federal Reserve President Susan Collins saying she had not yet made up her mind.
Traders are now pricing in a probability of over 60% for an interest rate cut in December. Earlier this month, the probability of a quarter-point cut next month was less than 50%.
The market is monitoring the trajectory of cryptocurrencies.
All eyes are on the cryptocurrency market after a significant increase in volatility last week and a decline in Bitcoin.
On Monday, Bitcoin fluctuated after a brief weekend rebound amid headwinds stemming from macroeconomic uncertainty and outflows from exchange-traded funds (ETFs). Market sentiment remained cautious as traders watched the $85,200 level as a key support level.
The largest cryptocurrency traded near $88,000, having pared most of its early losses after falling 2.3%. It had jumped more than 4% on Sunday.
June B. Liu, co-founder of Ten Cap, said in an interview with Bloomberg Television that the recent sell-off and volatility are somewhat related to other highly volatile or debt-dependent assets such as Bitcoin.
European concern… and Chinese-Japanese tension
Elsewhere, the euro and the pound sterling held steady as markets also focused on fiscal pressures in Europe. The French National Assembly rejected part of the 2026 budget in the early hours of Saturday, a move that underscores the uncertainty surrounding Prime Minister Sébastien Lecornu's approach to tackling the ballooning deficit.
The British government announced over the weekend that it will freeze train fares in the budget due to be announced on Wednesday. This move is part of a series of affordability measures as Chancellor Rachel Reeves seeks to offset the political fallout from needing to raise up to £25 billion ($33 billion) through tax increases and spending cuts to achieve fiscal stability.
In other geopolitical developments, the dispute between China and Japan continued, with China sending a letter to the United Nations, while the Japanese Defense Minister, during a visit to a military base near Taiwan, said that plans to deploy missiles at the site were proceeding according to schedule, amid escalating tensions between Tokyo and Beijing over the island.
Meanwhile, U.S. Secretary of State Marco Rubio said that the November 27 deadline proposed by President Donald Trump for Ukraine to secure its support for the U.S.-backed peace plan was not final and could be extended into the following week. His warning came after U.S.-Ukrainian talks on Sunday in Geneva, which both sides described as making progress toward an agreement.
