(Bloomberg) — Asian stocks are poised for a mainly positive open as Wall Street hit fresh highs ahead of an expected Federal Reserve rate cut this week.
Equity futures signaled gains for Hong Kong and Sydney, boosted by bets showing a Fed cut is already priced in for Wednesday. Tokyo may slip as markets reopen from Monday’s holiday. S&P 500 contracts were steady, as a $14 trillion record-breaking run in US equities heads for an inflection point, with the expected rate cut set to dominate a week that will shape policy for half of the world’s 10 most-traded currencies.
Bets on Fed easing sent the S&P 500 above 6,600 on Monday, while the Nasdaq 100 saw its longest advance since 2023. A jump in Tesla Inc. erased its 2025 drop after Elon Musk’s $1 billion stock purchase. Also aiding sentiment was a framework deal on keeping TikTok running in the US, with Trump saying he’d talk to China’s Xi Jinping Friday.
Treasuries rose, with two-year yields hovering near the lowest since last September. The dollar slid. Gold rose to a new record.
Signs of labor-market weakening and no major inflation surprises have sealed the deal for what money markets project will be a quarter-point Fed cut in September. The big question, though, will be the pace of easing after that, with prices stubbornly above the central bank’s 2% target.
“Now the discussion will turn to how aggressively the Fed will act,” said Chris Larkin at E*Trade from Morgan Stanley. “The Fed may remind everyone that it may be focused on jobs now, but it hasn’t forgotten about the other half of its mandate.”
Read: Trump Urges Powell to Cut Rates ‘Bigger Than He Had in Mind’
US policymakers on Wednesday will also release their quarterly update of economic and rate forecasts — known as the dot plot — and Fed Chair Jerome Powell will hold his regular post-decision press conference. In June, Fed officials were narrowly in favor of two quarter-point cuts in 2025.
What traders will really hang on to is the tone of Powell’s press conference and the “dot plot” projections, according to Fawad Razaqzada at City Index and Forex.com.
“I’ll be watching how the market reacts to any mention of inflation being ‘well anchored’ or the labor market ‘cooling more than expected’,” he said. “That sort of language would be music to the ears of dollar bears. On the flip side, a cautious Fed that hints at a ‘wait and see’ approach might stall the rally, at least temporarily.”
Before that, Razaqzada noted that there’s also a bit of data to keep things lively before and after the decision. Tuesday’s retail sales could either reinforce the soft-landing narrative or raise fresh concerns about consumer demand, he said.
Meanwhile, trade tensions between the two biggest economies could ratchet up after China ruled that Nvidia Corp. violated anti-monopoly laws with a high-profile 2020 deal. The surprise announcement emerged with officials from the nations heading into a second day of wide-ranging negotiations in Madrid over tariffs.
A team of US officials was due to arrive in India on Monday night for trade deal discussions, signaling the two nations are moving closer to resolving differences.
What Bloomberg Strategists say…
“Equity traders, fixated on this week’s anticipated Fed rate cut, are unlikely to be unsettled unless Tuesday’s retail sales report reveals a sharp decline. Still, the outlook bears watching, as consumer strength has long served as a crucial pillar for both the economy and financial markets.”
—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
Hang Seng futures rose 0.2% as of 7:27 a.m. Tokyo time S&P/ASX 200 futures rose 0.5% Nikkei 225 futures fell 0.2% S&P 500 futures were little changed Currencies
The euro was little changed at $1.1765 The Japanese yen was little changed at 147.35 per dollar The offshore yuan was little changed at 7.1185 per dollar Cryptocurrencies
Bitcoin was little changed at $115,434.84 Ether rose 0.2% to $4,519.96 Bonds
The yield on 10-year Treasuries declined three basis points to 4.04 Commodities
Spot gold was little changed West Texas Intermediate crude was little changed
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