Asian shares scaled five-month peaks on Thursday as market wagers on ever-more aggressive rate cuts extended a huge rally in U.S. stocks and bonds, while also leaving plenty of scope for disappointment in the new year.
The S&P 500 has climbed 14% in just two months to within a whisker of its all-time closing peak, while its price-to-earnings ratio is up by a quarter on the year at 24.0.
MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added another 1.4%, to be up 11% in two months and at its highest since August.
Japan's Nikkei (.N225) was off 0.4% as a rebound in the yen has kept its gains for December to a minimum.
Even Chinese blue chips (.CSI300) bounced 2.3%, having generally missed out on the global cheer as foreign investors fretted about the economy's faltering recovery and tensions with the United States.
EUROSTOXX 50 futures added 0.4% and FTSE futures 0.3%. S&P 500 futures edged up 0.1% to another record high, while Nasdaq futures firmed 0.2%.
A lack of major news has not stopped investors from ramping up bets on rapid-fire rate cuts from the Federal Reserve.
Futures now imply an 88% chance of a rate cut as early as March, a huge swing from a month ago when the probability was just 21%.
The market has about 157 basis points of easing priced in for 2024, and sees rates reaching 3.00-3.25% over 2025.
"The rapid decline in inflation is likely to lead the Fed to cut early and fast to reset the policy rate from a level that most participants will likely soon see as far offside," wrote analysts at Goldman Sachs in a note.