Asia Stocks Rise as Rate Cut Bets Build

Asian markets ended higher on Thursday as investors gained confidence in a U.S. interest rate cut later this month. The rally followed dovish remarks from Federal Reserve officials and weaker U.S. job data.

Japan’s Nikkei 225 rose 1.2%, driven by tech and export stocks. Australia’s ASX 200 climbed 0.8%, while South Korea’s Kospi gained 0.6%. India’s Sensex advanced 1.1%, led by gains in banking and energy.

Investor sentiment improved as traders grew more certain about the Fed’s next move.

Fed Officials Signal Policy Shift

Federal Reserve Governor Christopher Waller said recent data supports easing policy. He highlighted slower inflation and a cooler job market as signs that the Fed may not need more hikes.

His comments echoed statements from New York Fed President John Williams, who also opened the door to cuts. Traders quickly adjusted expectations.

By Thursday morning, Fed Funds futures priced in a 96.6% chance of a rate cut in September.

Weak U.S. Job Data Supports Rate Cut View

The JOLTS report, released on Wednesday, showed a sharp drop in U.S. job openings. July figures fell to 8.1 million, down from 8.6 million in June. This marked the lowest level since March 2021.

A slowdown in hiring could signal that the labor market is cooling. That gives the Fed more room to cut rates without stoking inflation.

Traders viewed the report as more proof that a rate cut is not just likely—but necessary.

Bond Yields Remain Elevated but Calm

Even with stronger equity markets, bond yields stayed high. The U.S. 10-year Treasury yield held near 4.22%, reflecting ongoing concerns about deficits and inflation.

Still, yields remained stable compared to the sharp movements seen earlier this year. That stability helped calm markets.

In Asia, Japan’s 10-year yield stayed near 1.09%, while Australia’s fell slightly to 3.87%.

Oil and Gold Retreat from Recent Highs

Commodities pulled back despite stronger risk appetite. Brent crude oil fell 0.5% to $86.40 per barrel, as traders shifted focus from supply concerns to weaker demand from China.

Gold slipped 0.8% to $2,045 per ounce, after touching near-record highs. Investors moved out of safe havens and into equities, reducing demand for gold.

Eyes Now on U.S. Payrolls Report

Markets now await Friday’s non-farm payrolls report. A soft number could further boost the case for rate cuts and extend this week’s rally.

In Asia, traders also watch regional central banks. If inflation cools further, some may consider easing policy alongside the Fed.

ForexFlash Outlook

The rally in Asia shows how closely global markets watch the Fed. Dovish commentary and weaker job numbers boosted risk sentiment and raised hopes for a new easing cycle.

Investors now prepare for key data and central bank meetings that could confirm the shift. If trends hold, September could mark a turning point for global monetary policy.