(Bloomberg) — Asian stocks hit a record high after Wall Street set new peaks, as investors bet on an interest-rate cut by the Federal Reserve this week. Gold also climbed to its highest level.
The MSCI Asia-Pacific Index advanced 0.5% with gains in Japan, South Korea and Hong Kong. S&P 500 contracts were steady after a $14 trillion run pushed US equities to an inflection point, with the expected rate cut set to dominate the week. Also aiding sentiment was a framework deal to keep TikTok running in the US, with President Donald Trump saying he’d talk to China’s Xi Jinping on Friday.
Gold rose to a new record while a gauge of the dollar steadied after sliding in the prior session. Treasuries were little changed after rising in the prior session.
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’
On Wednesday, US policymakers 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.
In other Fed news, a US appeals court blocked the president from removing Governor Lisa Cook from her post while her lawsuit challenging the dismissal proceeds.
Also, Trump’s economic adviser Stephen Miran is on his way to joining the central bank’s board after the Senate confirmed him to the post.
Treasury curve steepening will get an extra kick even though bond traders were expecting Stephen Miran to be in place for this week’s Fed meeting. Traders will now face the risk of Miran putting in a very low dot plot forecast, which is not fully priced in.
—Mark Cranfield, Markets Live strategist. For full analysis, click here.
“In the session ahead, we navigate US retail sales and that poses a degree of risk to markets,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “However, with the Fed meeting looming large in the following session, it will likely take an outsized surprise in retail sales to really move the dial on risk.”
Separately, JPMorgan Chase & Co. will cut the weight of the largest bond issuers in its flagship emerging-market index, diverting investor flows from the likes of China and India toward smaller nations.
Corporate News:
Hesai Group, the world’s largest maker of lidar sensors used in cars, rose in its Hong Kong trading debut after its HK$4.2 billion ($535 million) listing in the city. Urban Company Ltd.’s $215 million initial public offering, the most subscribed in India this year, is poised for a strong trading debut on Wednesday, according to indications in the gray market. Tencent Holdings Ltd. began marketing its first bond sale in four years, joining a wave of borrowing among Chinese tech firms as competition intensifies in a quickening global AI race. Alphabet Inc. on Monday joined an elite group of companies valued at more than $3 trillion, the latest sign of improving investor sentiment toward the Google parent. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 10:34 a.m. Tokyo time Japan’s Topix rose 0.3% Australia’s S&P/ASX 200 rose 0.3% Hong Kong’s Hang Seng rose 0.3% The Shanghai Composite rose 0.3% Euro Stoxx 50 futures were little changed Currencies
The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1761 The Japanese yen was little changed at 147.50 per dollar The offshore yuan was little changed at 7.1191 per dollar Cryptocurrencies
Bitcoin was little changed at $115,438.03 Ether rose 0.5% to $4,536.93 Bonds
The yield on 10-year Treasuries was little changed at 4.04% Japan’s 10-year yield was unchanged at 1.585% Australia’s 10-year yield declined five basis points to 4.22% Commodities
West Texas Intermediate crude rose 0.3% to $63.50 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott.
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