Asian Stocks Rise As Powell Signals Fed Will Cut: Markets Wrap

Asian equities gained at the open, tracking Wall Street’s rally, after Federal Reserve Chairman Jerome Powell opened the door to resuming interest rate cuts. 

Shares in Japan and South Korea advanced with MSCI’s gauge for the region gaining 0.2%. Australian stocks hit a fresh record. Treasuries opened lower, giving up some of the gains on Friday after Powell’s speech. Yields on the policy-sensitive two-year bond rose one basis point to 3.70%. A gauge of dollar edged up 0.1% after posting its third straight weekly loss.

Traders see an 84% chance of a Fed rate cut next month after Powell signaled at Jackson Hole the central bank may ease before inflation fully returns to target amid a softening jobs market. Still, officials remain split on the outlook, warning of lingering price risks from US trade tariffs ahead of this week’s key inflation data.

“Powell’s wish-to-reality signal is set to serve as glue on the cracks beneath Asia’s mildly shaking markets,” said Hebe Chen, analyst at Vantage Markets. “For investors, this fresh dose of optimism is likely to keep risk appetite buoyant” through to the Sept. 17 Fed board meeting.

In Asia, Chinese stocks will be in focus with questions mounting over how much further the market can rally with concerns of trade tariffs and a deep-rooted property crisis weighing on the economy. While the market’s steady advance may suggest less risk of a sudden correction, some analysts are warning that a bubble is in the making.

The Nasdaq Golden Dragon China Index rose 2.7% Friday and futures indicated a stronger open for shares in Hong Kong and mainland China.

“Markets might be expecting, either correctly or incorrectly, that macroeconomic fundamentals will improve,” said Homin Lee, senior macro strategist at Lombard Odier Ltd. in Singapore. “But a bull market will not be sustainable if inflation remains close to 0% and corporate pricing power faces severe headwinds from weak domestic demand.”

Now comes Nvidia Corp., which is set to report quarterly earnings on Wednesday after the market close. Traders are hoping it can soothe fears about AI spending and effectively confirm that the stock market’s latest rally isn’t just a technology bubble. 

In commodities, oil held its advance while gold dipped 0.2%.

Some of the main moves in markets: 

Stocks

• S&P 500 futures were little changed as of 9:20 a.m. Tokyo time

• Hang Seng futures rose 1.5%

• Japan’s Topix rose 0.3%

• Australia’s S&P/ASX 200 rose 0.9%

• Euro Stoxx 50 futures fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.2% to $1.1699

• The Japanese yen fell 0.4% to 147.46 per dollar

• The offshore yuan was little changed at 7.1739 per dollar

• The Australian dollar fell 0.1% to $0.6483

Cryptocurrencies

• Bitcoin rose 0.4% to $113,271.86

• Ether fell 0.3% to $4,773

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.27%

• Australia’s 10-year yield declined three basis points to 4.28%

Commodities

• West Texas Intermediate crude rose 0.2% to $63.76 a barrel

• Spot gold fell 0.2% to $3,365.09 an ounce