Asian stocks pushed higher on Tuesday, extending Wall Street’s record-breaking momentum, as traders prepared for what is widely expected to be a US interest rate cut this week. The move comes as investors also monitor potential talks between President Donald Trump and Chinese leader Xi Jinping.
The Federal Reserve’s policy decision, due Wednesday, is viewed as a near certainty, but market focus has shifted to the central bank’s “dot plot” projections for borrowing costs in the months ahead. Investors will also parse comments from Fed Chair Jerome Powell for signals on how aggressively the bank may ease policy as the US economy shows mixed signs.
Recent data has highlighted a slowing labour market. Jobless claims and unemployment are now at their highest since 2021, and for the first time in four years, job seekers outnumber available positions. “That single ratio tells the Fed all it needs to know: rate cuts are back on the runway,” said Stephen Innes of SPI Asset Management. He pointed to rising housing costs, record-low affordability, and soaring rents as additional pressures that could erode consumption, hiring, and overall confidence.
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The Fed meeting also comes with a reshaped policy committee, as Stephen Miran, chair of the White House Council of Economic Advisers, was confirmed by the Republican-led Senate. His arrival follows President Trump’s repeated calls for the Fed to lower rates and his criticisms of Powell’s leadership.
In early Asian trading, Tokyo’s Nikkei gained 0.3 percent to close at 44,904.13, while Hong Kong’s Hang Seng Index climbed 0.3 percent to 26,535.26. Shanghai’s Composite Index was up 0.1 percent at 3,866.00. Currency markets also reflected shifting expectations: the euro edged up to $1.1770 from $1.1768 on Monday, the pound slipped slightly to $1.3604, while the dollar weakened against the yen, trading at 147.27 from 147.38.
Gold surged past a new record, crossing $3,689 per ounce, while oil prices also firmed. West Texas Intermediate rose 0.3 percent to $63.47 a barrel, and Brent crude matched that increase, reaching $67.65.
Traders are also eyeing diplomacy. Trump confirmed via Truth Social that he expects to speak with Xi later this week, raising hopes of progress in US-China relations. The announcement followed news of a “framework” agreement over TikTok’s US operations, which both governments say will be finalised Friday alongside ongoing trade discussions in Madrid.
