Asian Stocks Climb as Trade Hopes and Fed Cut Bets Power Global Rally – Asia Market Wrap
Asian stocks advanced and a gauge of global equities was on track for another record high on trade-deal optimism and increased expectations for Federal Reserve interest-rate cuts this year.
Asia-Pacific stocks gained as much as 0.7% to the highest since September 2021 after the S&P 500 advanced 0.8% to within striking distance of a record. The Nasdaq 100 achieved the feat on Thursday, helping MSCI’s global shares index to a new high. US stock futures edged upward Friday and Japanese stocks rose, while South Korea’s fell.
US Commerce Secretary Howard Lutnick said late Thursday that the US and China had finalized an understanding on trade following talks last month. Meanwhile, the Treasury Department announced a deal with G-7 allies that will exclude US companies from some taxes imposed by other countries in exchange for removing the “revenge tax” proposal from President Donald Trump’s tax bill.
Treasuries slipped after rallying Thursday on increased expectations for Fed cuts. The swaps market has fully priced two further rate reductions this year and increased bets on a third. An index of the dollar was little changed after dropping for four straight sessions.
The Thursday moves were driven by US economic data that supported the case for policy easing. Consumer spending grew in the first quarter at the weakest pace since the onset of the pandemic. As a result, gross domestic product slid at a downwardly revised 0.5% annualized rate. Recurring applications for unemployment benefits rose to the highest since 2021 – but initial claims fell.
A flurry of Fed officials this week made clear they’ll need a few more months to gain confidence that tariff-driven price hikes won’t raise inflation in a persistent way. Economists see the personal consumption expenditures price index excluding food and energy – the Fed’s preferred gauge of underlying inflation – marking the tamest three- month stretch since the pandemic five years ago.
