Asian stocks gain at open after Wall Street rally

Asian stocks posted modest gains at the open after Wall Street hit fresh highs ahead of an expected Federal Reserve interest-rate cut this week.

Shares in Japan, Australia and South Korea opened higher, with the MSCI Asia-Pacific Index hovering near its record high. S&P 500 contracts were steady, as a $14 trillion record-breaking run in US equities headed 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 posted its longest advance since 2023. 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.

A gauge of the dollar steadied after sliding in the prior session. Gold held its gains after rising 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.”

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.

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.

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.”

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.

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