European equity futures rose, tracking a record S&P 500 close, on optimism about US interest-rate cuts after Federal Reserve Chair Jerome Powell said inflation is getting back on a downward path.

The MSCI AC Asia Pacific Index headed for its longest stretch of gains since May. Japanese equities climbed, with the benchmarks now less than 1% from their record highs. SoftBank Group Corp. shares traded above their lifetime closing high for the first time in three years, buoyed by a global surge in AI and chip investment. Singaporean stocks outperformed on the strength of banking shares.

Futures contracts for the S&P 500 edged lower after the benchmark closed above 5,500 for the first time, the gauge’s 32nd record this year. Tesla Inc. surged 10% to lead gains in megacaps, helping the Nasdaq 100 close above the 20,000 mark for the first time.

The new record high close in the S&P 500 and Nasdaq “could also be taken as another win given the psychological significance that ‘round numbers’ hold,” said Chris Weston, head of research at Pepperstone Group in Melbourne.

In other markets, Australia’s three-year bond yield extended its rise after better-than-expected retail sales data reinforced the case for a rate hike.

Investors are looking to US initial jobless claims and ADP employment data due Wednesday to gain more clues on the policy outlook. Fed Chair Powell acknowledged the central bank has made “quite a bit of progress” in reducing inflation but emphasized officials need more evidence before lowering interest rates.

In China, services activity expanded at the slowest pace in eight months in June, a private gauge showed, a slowdown that may add to worries over the economy’s outlook. Stocks in Hong Kong gained, while those on the mainland fell.

In the US, equities keep defying doomsayers amid solid corporate earnings, AI mania and expectations that interest rates will drop, adding more than $16 trillion to the S&P 500’s value from a closing low on October 2022. A lack of any meaningful pullback has given bulls conviction that the rally is sustainable.

While the US market will close early on Wednesday due to Thursday’s July 4 holiday, investors are also gearing up for the all-important US payrolls reading due Friday. Economists expect the report to show employers added about 190,000 workers in June and the unemployment rate likely held at 4%.