Asian Markets Cautiously Higher Despite Policy Uncertainty

Asian stock markets advanced modestly on Monday, September 22, as investors weighed the impact of U.S. policy shifts against expectations for additional Federal Reserve rate cuts later this year. The trading session was characterized by cautious optimism, with most major indices posting slight gains while currency markets adjusted to new risks.

The MSCI Asia ex-Japan index added around 0.3 percent, supported by selective buying in technology and financials. Japan’s Nikkei 225 closed higher by 0.4 percent, aided by a weaker yen, while Hong Kong’s Hang Seng Index eked out a 0.2 percent rise amid improved investor sentiment in Chinese internet companies.

India, however, emerged as a key underperformer. Equity benchmarks in Mumbai fell after President Donald Trump announced steep new visa fees, a move that directly affects India’s large technology outsourcing sector.

Trump’s $100,000 H-1B Visa Fee Sends Shockwaves

In a surprise weekend announcement, U.S. President Donald Trump introduced a $100,000 fee on new H-1B visas, citing the need to prioritize domestic employment and raise government revenues. The move immediately rattled Indian markets because the country’s technology sector heavily relies on H-1B visas to place skilled workers at U.S. client firms.

Shares of major Indian IT services companies fell sharply. Infosys, Tata Consultancy Services (TCS), HCLTech, and Wipro all declined around 2 percent each, dragging down the broader Nifty IT index by 3 percent. The broader Sensex ended the session down 0.11 percent, while the Nifty 50 was little changed, falling 0.05 percent.

Analysts said the visa crackdown could significantly raise costs for Indian firms, reduce outsourcing competitiveness, and accelerate a shift toward automation and onshore hiring in the U.S. Although Indian tech giants have diversified revenue streams, the sudden policy change represents a material risk for near-term growth and margins.

Federal Reserve Rate Outlook Takes Center Stage

Beyond policy-driven volatility, investors focused on the Federal Reserve’s monetary stance. Following its first rate cut since 2024, markets are now pricing in an additional 44 basis points of easing by the end of 2025.

Upcoming speeches by several Fed officials, including New York Fed President John Williams and Governor Stephen Miran, are seen as pivotal. Traders are hoping for clues on the pace of future rate reductions, especially given signs of slowing U.S. economic momentum and softer inflation pressures.

Lower U.S. interest rates would provide relief for global liquidity conditions, which could offset some of the risk aversion generated by trade and immigration policy uncertainty. Equity markets across Asia responded positively to this outlook, despite localized weakness in India.

Dollar Holds Firm, Emerging Market Currencies Under Pressure

In currency markets, the U.S. dollar remained broadly steady against its peers. The dollar index consolidated recent gains as investors weighed the impact of Trump’s visa measures against the Fed’s dovish tilt. The Indian rupee came under particular pressure, reflecting concerns over both weaker foreign investor flows and the direct impact of visa restrictions on India’s services sector.

The Japanese yen slipped toward 148.20 per dollar, reflecting capital outflows into equities and ongoing Bank of Japan commentary about possible tightening. Meanwhile, the Chinese yuan was stable after modest support from state banks and signs of easing U.S.-China trade friction.

Investor Outlook: Balancing Policy Risk and Rate Relief

The outlook for Asian equities remains mixed. On one hand, the Fed’s accommodative stance continues to underpin risk appetite, suggesting scope for further gains in equities if liquidity conditions improve. On the other, Trump’s aggressive immigration policy and protectionist stance create significant uncertainty for key sectors like technology and outsourcing.

For now, investors are balancing optimism over lower borrowing costs against the risks of restrictive U.S. policies that directly affect international business models. Market analysts suggest volatility will likely increase in the weeks ahead as central bank commentary and political developments shape the global risk narrative.