Asian markets have risen, extending the record gains on Wall Street, as traders anticipate a US interest rate cut this week. The Federal Reserve’s policy decision, due on Wednesday, is expected to result in a rate cut, with discussions focusing on future meetings and the “dot plot” outlook for borrowing costs.
The US jobs market has slowed, and inflation remains above target, with jobless claims and unemployment at their highest since 2021. According to Stephen Innes of SPI Asset Management, “rate cuts are back on the runway” due to the current job market conditions. Innes also noted that the housing drag, with mortgage payments nearly doubled from pre-Covid levels and affordability at record lows, would further impact consumption, profits, hiring, and confidence.
The Federal Reserve meeting will take place with a new member, Stephen Miran, who was cleared by the Republican-majority Senate on Monday. Miran’s appointment comes as President Donald Trump demands the Fed cut borrowing costs and accuses Jerome Powell, the bank’s boss, of being unfit for the job.
In early trade, Tokyo, Hong Kong, Shanghai, Sydney, Taipei, Manila, and Jakarta saw gains, while Seoul reached another record high. However, Singapore and Wellington experienced losses. The positive mood follows Wall Street’s S&P 500 and Nasdaq hitting records.
The expectation of US rate cuts has weighed on the dollar against its peers and pushed gold to a new all-time peak of above $3,689. President Trump announced on his Truth Social network that he would speak with Chinese counterpart Xi Jinping at the end of the week, raising hopes for easing tensions between the world’s economic superpowers.
The US and China reached a framework deal over their TikTok dispute, which is expected to be finalized by the two leaders on Friday. The agreement was made during high-level talks between the two sides in Madrid, which included discussions on their trade dispute. As of around 0230 GMT, key figures showed Tokyo’s Nikkei 225 up 0.3 percent, Hong Kong’s Hang Seng Index up 0.3 percent, and Shanghai’s Composite up 0.1 percent. The euro/dollar was up at $1.1770, while the pound/dollar was down at $1.3604. West Texas Intermediate and Brent North Sea Crude saw gains of 0.3 percent.
The expected US rate cut and talks between President Trump and Xi Jinping have significant implications for the global economy. The outcome of the Federal Reserve’s policy decision and the future meetings will be closely watched by traders and investors. The easing of tensions between the US and China could also lead to further market gains. As the global economy continues to evolve, traders and investors will be looking to these developments for insight into future market trends.