China's PMI Contraction and Fed Rate Cut Speculation Stir Asia-Pacific Markets
Hong Kong, Monday, 1 December 2025.
Asia-Pacific markets are affected by China’s PMI contraction, hinting at economic slowdown, and anticipation of a U.S. Fed rate cut on December 10, impacting investment strategies.
China’s PMI Signals Economic Slowdown
China’s private Purchasing Managers’ Index (PMI) for November 2025 contracted unexpectedly, with the RatingDog China General Manufacturing PMI dropping to 49.9, indicating a contraction in manufacturing activity [1]. This contraction, marking a significant downturn, reflects ongoing challenges in the Chinese economy as it grapples with weak domestic demand and cautious export sentiment. The PMI figure below 50 suggests a shrinkage in manufacturing activity, which has been a persistent issue as China navigates global economic uncertainties and internal market pressures [1][3].
Impact on Asia-Pacific Markets
The contraction in China’s PMI has already begun to ripple through Asia-Pacific markets. On December 1, 2025, the Hang Seng Index rose by 0.81%, and the mainland CSI 300 increased by 1.1% despite the broader economic concerns [1]. This mixed market response highlights investor caution amid economic slowdown signals from one of the region’s largest economies. The contraction has raised fears of a broader economic deceleration, potentially affecting investment decisions and economic predictions across the Asia-Pacific sphere [3].
U.S. Federal Reserve Rate Cut Speculation
In parallel, traders are closely monitoring the U.S. Federal Reserve’s upcoming meeting on December 10, 2025, with growing speculation of a rate cut. Market expectations for a rate cut have been bolstered by recent economic indicators, including subdued inflation and slower economic growth forecasts for 2026 [5]. The potential for a rate cut has already influenced commodity markets, with gold prices rising as investors seek non-yielding assets as a hedge against economic uncertainty [5].
Digital Currency Concerns in China
Adding to market concerns, the People’s Bank of China recently issued warnings about the risks associated with digital currencies, contributing to volatility among Hong Kong-listed firms with exposure to digital assets [1]. This regulatory stance has led to significant declines in related stocks, as investors reassess the risk profiles of digital currency investments amidst tightening regulatory scrutiny [1].