Stocks crumble as hopes fade for imminent Fed rate cut
Asian shares tumbled on Friday, 14 November 2025 joining a global selloff as hawkish comments from Federal Reserve officials hosed down hopes for a US rate cut next month, while a still-messy data calendar added to the angst.
Source: Reuters.
MSCI's broadest gauge of Asian shares outside of Japan slid 1.6% after stocks on Wall Street snapped a four-day winning streak overnight, racking up their biggest one-day fall since the Liberation Day tariff turmoil in April.
Treasuries retreated as investors scaled back expectations of a rate cut from the Fed in December to just 51%, down from 63% a day earlier.
"The fall in US shares reflected reduced expectations for a Fed rate cut next month – it's now around 50/50 based on money market pricing – following hawkish comments by some Fed officials along with ongoing concerns about tech/AI valuations," said Shane Oliver, chief economist and head of investment strategy at AMP in Sydney.
"Shares remain vulnerable to a correction after a strong run-up this year and with stretched valuations for tech stocks, but with seasonal tailwinds now kicking in, the fallback in US shares could just be a test of last week's low."
In early European trading, Euro Stoxx 50 futures were down 0.3%, German DAX futures rose 0.1% and FTSE futures slid 0.4%.
US S&P 500 e-mini futures reversed early gains as dip-buying in the Asian morning petered out and last traded down 0.2%, while Nasdaq futures fell 0.5%.
Japan's Nikkei fell 2%, Australia's resources-heavy shares slid 1.4%, while South Korea tumbled as much as 3.6%, with losses deepening as the day progressed.
Chinese shares eased 0.9% after the release of monthly activity figures which showed industrial production and retail sales slowing in October, missing analyst estimates and snuffing out a short-lived rally in equity markets.
Markets seek shelter
"The drawdown seen across assets was pronounced, and looking across the suite of investible markets there were few places to hide," said Chris Weston, head of research at Pepperstone.
"With the US government open for business, traders now await the Bureau of Labor Statistics schedule for key economic data," Weston said. "So far, positioning has been set largely on Tier 2 data, and that will need to be reconciled against the headline data that truly drives the Fed’s decision-making process."
The White House, however, dashed hopes for a clearer view of the US economy any time soon, saying the US unemployment data for October may never be available. Adding to the downbeat mood and pointing to worries about high inflation, a growing number of Fed officials overnight signalled caution about further rate cuts.
Alberto Musalem, who runs the St. Louis Fed Bank, said there was limited room to ease further without becoming overly accommodative, while Cleveland Fed President Beth Hammack said interest-rate policy should remain restrictive in order to put downward pressure on inflation.
Minneapolis Fed President Neel Kashkari told Bloomberg that he opposed a rate cut last month and is on the fence about December.
"Last night's trading action became a case of selling America," analysts from DBS wrote in a research note. "Current hawkish Fed rhetoric probably reflects unease to cut further amidst limited official data and the need for optionality in December."
Treasury bonds attracted bids on Friday as investors looked for safe havens amid the carnage. Two-year Treasury yields slid 0.8 basis points to 3.5786%, having risen 3 basis points overnight, while the 10-year yield held steady at 4.1134%, after gaining 3 bps overnight.
The rise in yields, however, failed to support the US dollar, which slipped 0.1% against its major peers to 99.15, close to the lowest level in two weeks.
The yen got some much-needed respite and last traded at 154.43 per dollar, after hitting the weakest level in nine months on Wednesday. The Swiss franc stabilised after an earlier jump of 0.6% against the dollar.
Sterling, however, lost 0.4% to $1.3145 on Friday after the Financial Times reported Prime Minister Keir Starmer and finance minister Rachel Reeves have ditched their manifesto-busting plan to increase income tax rates.
Oil prices jumped after a Ukrainian drone attack damaged a Russian oil depot, sending Brent crude futures 1.5% higher to $63.95, turning positive for the week.
Spot gold prices rose 0.4% at $4,186.48 per ounce, having lost 0.6% overnight to snap a four-day winning streak. However, the yellow metal remains far from its record top of $4,381.