Global stock markets saw a surge of optimism on Monday, November 24, 2025, as Asian equities broadly rallied, driven by renewed expectations of an interest rate cut by the United States Federal Reserve. This provided a much-needed calm after a turbulent previous week marked by fears of a bubble in artificial intelligence (AI) stocks. For Kenya, the global sentiment shift offers a complex picture, balancing potential positives for foreign investment against the backdrop of a remarkably strong year for the Nairobi Securities Exchange (NSE).

Major indices across Asia posted gains. Hong Kong's Hang Seng Index rose 1.4%, and South Korea's Kospi climbed over 1.13%, with markets in Sydney, Singapore, and Taipei also recording positive growth. Japanese markets were closed for a public holiday. The rally followed comments made on Friday by New York Federal Reserve President John Williams, who suggested there was “room for a further adjustment” in interest rates at the Fed's upcoming meeting on December 9-10. Following his remarks, the probability of a rate cut surged to approximately 70%, a significant jump from earlier estimates of around 35% to 40%.

US Rate Debate and Tech Volatility

The debate within the US central bank remains intense, with officials divided between tackling stubbornly high inflation and addressing a cooling labor market. The US unemployment rate rose to 4.4% in September, its highest since October 2021, a key factor cited by proponents of a rate cut, including Williams. The Federal Reserve has already cut its benchmark rate twice in 2025, in September and October, bringing it to a range of 3.75% to 4%.

This policy uncertainty has compounded investor anxiety, particularly in the technology sector. Last week, markets experienced a significant sell-off fueled by concerns that the massive investments in AI might be overvalued. Chip designer Nvidia, a bellwether for the AI boom, saw its stock decline 7.9% in November despite having reached a market capitalization of over $5 trillion in October. The company’s strong third-quarter earnings, with revenues of $57 billion, had initially soothed some fears, but the broader market correction underscored the sector's volatility.

Implications for the Kenyan Economy

While distant, these global market dynamics hold significant implications for Kenya. A key concern is the flow of foreign direct investment (FDI), particularly into the country's burgeoning tech sector, dubbed 'Silicon Savannah'. According to the Kenya National Bureau of Statistics, the sector attracted KSh 64.7 billion in FDI in 2024, much of it from US-based venture capital funds. A sustained global tech downturn could tighten this crucial funding pipeline for local startups.

Furthermore, a global flight to 'safe-haven' assets, such as US Treasury bonds, could put downward pressure on the Kenyan Shilling. As of Friday, November 21, the shilling traded at approximately 129.45 to the US dollar. A weaker shilling would increase the cost of imports and complicate the servicing of foreign-denominated debt.

However, the Nairobi Securities Exchange (NSE) has shown remarkable resilience and growth in 2025. President William Ruto, in his state of the nation address on November 20, highlighted that the NSE is recognized as one of the best-performing emerging markets globally. Since January 2025, investor wealth at the NSE has grown by over KSh 1 trillion, with the market capitalization surpassing the KSh 3 trillion mark for the first time. The NSE All Share Index (NASI) has recorded year-to-date gains of over 52%. This strong domestic performance could provide a buffer against some external shocks, though the market is not immune to shifts in international investor sentiment. A significant portion of trading activity is often driven by foreign investors, whose participation can be influenced by global risk appetite.

The renewed hopes for a US rate cut could, therefore, be a positive signal for the NSE, potentially encouraging foreign investors to seek higher returns in emerging markets like Kenya. The coming weeks, leading up to the Federal Reserve's December meeting, will be critical in determining market direction both globally and locally.