Asian Stocks Set for Record Close Amid Fed Rate Cut Bets
(bloomberg) — Asian stocks are poised for a record close, mirroring a global rally in equities, as investors anticipate a potential interest-rate cut by the Federal Reserve.
The MSCI Asia Pacific Index rose as much as 0.2%, surpassing its previous all-time high close from February 2021. A global index of equities remained steady after reaching its highest level on Friday. Trading in Treasuries is paused during Asian hours due to a holiday in Japan. Chinese shares climbed nearly 1%, despite weaker-than-expected factory and consumer data.
The Hong Kong dollar extended its gains to a four-month high, driven by tightening currency supply as the quarter ends.French bond futures opened relatively stable in Asian trading following Fitch Ratings’ downgrade of France to A+ from AA-.
This week’s central focus is whether Fed officials will counter market expectations of continued interest-rate cuts into next year. Alongside the Fed’s decision on Wednesday, policy announcements are expected from the Bank of canada, the Bank of England, and the bank of Japan.
“The week is going to be all about central bank decisions. Of course,the biggest one will be the Fed,which is all but certain to cut interest rates by 25 basis points,” noted Kyle rodda,a senior market analyst at Capital.com in Melbourne. “The question is how aggressive the Fed is with this easing, with the markets effectively pricing in a cut at each of the final three meetings of the year.”
Economic activity in China slowed more than anticipated for the second consecutive month, marked by a significant decline in investment.
“China’s August data are hardly inspiring-exports remain under tariff pressure while the property downturn continues to weigh on domestic demand,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “Yet, markets are shrugging it off, with cash-rich households rotating into equities and AI momentum powering chip stocks higher.”
[Image of China’s industrial output and consumption slump with caption: China’s industrial output and consumption had their worst month yet this year amid a slump in investment. HSBC’s Jing Liu,Greater China Chief Economist,weighs in on the likelihood that policymakers will roll out more support. Source: Bloomberg]
US-China trade talks centered on trade, the economy, and the future of ByteDance Ltd.’s TikTok, which faces a deadline this week to secure a deal allowing it to continue operating in the US. discussions also aimed to prepare for a potential meeting between President Donald Trump and Xi Jinping as early as October.
Reuters reports that the Trump management is highly likely to extend the September 17 deadline for Bytedance to divest TikTok’s US assets or cease operations.
Simultaneously occurring, Asian primary bond markets are active, with approximately a dozen issuers offering notes in various currencies or engaging banks for potential deals. This contributes to a global surge in deals this month, fueled by tight spreads indicating confidence in corporate creditworthiness.
What Bloomberg’s Strategists Say…
“Global equities are li