(Bloomberg) — Asian stocks climbed for a fourth day on Tuesday, as optimism around US interest-rate cuts spread to the region and fueled a buying spree for technology shares..
MSCI’s Asia-Pacific equities gauge reached its highest level since February 2021, with tech firms like Taiwan Semiconductor Manufacturing Co. and Alibaba Group Holding Ltd. contributing most to the gains. Shares in South Korea, Taiwan and Hong Kong rose, while those in Indonesia declined after the longtime finance minister was removed.
The moves followed a surge in bets on rate cuts by the Federal Reserve that pushed stocks near record highs on hopes that easier policy will bolster corporate America. There was also a risk-on mood in the markets thanks to continued optimism over the tech industry, as the Nasdaq Composite index reached another record high.
“Investors are still seeing upside growth potential in the tech space, which is why the buying flows into the sector are continuing,” said Tim Waterer, chief market analyst at KCM Trade. The Nasdaq Composite’s record illustrates “how tech stocks remain in vogue — a theme which also played out in Asian markets today.”
In Japan, the implications of Prime Minister Shigeru Ishiba’s resignation have spilled into markets. The Nikkei 225 reached a new intraday record high on Tuesday before erasing gains. The country’s government bonds were firmer after having slumped Monday as Ishiba’s decision to step down underscored expectations for looser fiscal policy.
China’s export growth slowed to the weakest in six months as a slump in shipments to the US deepened again, although a surge in sales to other markets kept Beijing on track for a record trade surplus.
Elsewhere, Indonesian President Prabowo Subianto abruptly replaced Sri Mulyani Indrawati as finance minister, risking renewed financial turmoil for Southeast Asia’s biggest economy following violent protests in recent weeks against his administration.
The rupiah slid against the dollar and Bank Indonesia said it would intervene to maintain the currency’s stability. Local stocks declined as much as 1.7% on Tuesday after having closed lower Monday ahead of the announcement, as rumors earlier in the day about her removal hit investor sentiment. Yield premiums on Indonesian dollar bonds and the cost to insure them against default widened.
What Bloomberg Strategists say…
“Indonesian assets face renewed pressure after the sudden ouster of Finance Minister Sri Mulyani Indrawati, a move that will likely revive concerns over the nation’s fiscal discipline. While Indonesia’s debt profile is relatively sound, policy continuity will be vital to maintain investor confidence. Until some clarity emerges, Indonesia’s markets will struggle to shake off the pressure.”
— Mary Nicola, Markets Live strategist. Click here for the full analysis.
The S&P 500 rebounded Monday after a selloff the prior session due to the weak jobs report. Even as upcoming data is projected to show stalled progress on reducing inflation, traders expect almost three Fed cuts this year, starting this month. Treasuries 10-year yields were up 1bp to 4.05%. The dollar fell and gold climbed to another record high.
Bloomberg’s GlobalAgg Index, which tracks sovereign and corporate debt across developed and emerging markets has surged more than 20% from its 2022 trough as cooling US labor data fuel bets the Fed will step up policy easing.
“For the next several days, markets in Asia are likely to take their cue from the US, with few regional catalysts in sight,” said Frederic Neumann, HSBC’s chief Asia economist. He sees American inflation data as helping to clarify the interest-rate path not just for the Fed, but also for Asian central banks including the People’s Bank of China.
Ahead of next week’s Fed meeting, Thursday’s core consumer price index is projected to show a 0.3% increase in August for a second month. Before that, figures from the Bureau of Labor Statistics on Tuesday will likely unveil another US jobs markdown that will set the stage for a rate cut.
US INSIGHT: What 550k Fewer Jobs Means
Read: S&P 500’s Rare Summer Climbs Send Bullish Signal: Equity Insight
To Megan Horneman at Verdence Capital Advisors, upcoming inflation data probably won’t be enough to change the likelihood of a Fed reduction in September. The biggest question for investors now is how many more rate cuts we will receive.
“After this week’s inflation data, we will get a better picture on what the Fed can do with rates,” Horneman said. “However, we are not out of the woods with inflation, and the Fed may deliver a ‘hawkish cut’ while reminding investors of their dual mandate, especially if inflation continues to move further away from their target.”
In France, Prime Minister Francois Bayrou lost a confidence motion in parliament, forcing a third change in government in just over a year. The country’s 10-year note futures opened steady.
In commodities, oil rose for a second day as investors weighed the the prospect for softening demand after Saudi Arabia cut pricing for most of its grades. Iron ore climbed for a sixth day and headed for its highest close in more than six months on expectations that Chinese demand will gather momentum.
Stocks
S&P 500 futures rose 0.1% as of 12:37 p.m. Tokyo time Japan’s Topix was little changed Australia’s S&P/ASX 200 fell 0.6% Hong Kong’s Hang Seng rose 0.8% The Shanghai Composite fell 0.3% Euro Stoxx 50 futures fell 0.1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1766 The Japanese yen was little changed at 147.37 per dollar The offshore yuan was little changed at 7.1207 per dollar Cryptocurrencies
Bitcoin fell 0.4% to $111,547.42 Ether was little changed at $4,298.03 Bonds
The yield on 10-year Treasuries was little changed at 4.05% Japan’s 10-year yield declined 1.5 basis points to 1.555% Australia’s 10-year yield declined two basis points to 4.26% Commodities
West Texas Intermediate crude rose 0.5% to $62.55 a barrel Spot gold rose 0.2% to $3,643.50 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott.
©2025 Bloomberg L.P.