The Dollar Declines on Fed Rate-Cut Bets While Stocks Rise – Asia Market Wrap

Stocks and futures climbed, while the Dollar fell, as optimism over a probable Fed rate decrease boosted risk appetite and outweighed fresh US-China trade tensions.

Asian equities surged 1.5%, the first rise in four days, and contracts for European and US stocks advanced after Fed Powell’s concerns about a worsening job market strengthened expectations for an October rate cut. The Dollar fell for a second day, sending Asian currencies higher, as Treasury two-year rates remained near their lows since 2022. Gold reached a new high.

Since the tariff-fueled selloff in April, global markets have recovered dramatically on anticipation of additional monetary easing following the Fed’s September rate cut and excitement about AI. That surge, however, faces additional hurdles as trade tensions between the US and China reemerge, with both sides increasing rhetoric and indicating potential new restrictions on crucial technology.

In other news, the EU is considering compelling Chinese enterprises to hand over technology to European companies if they want to operate locally, as part of an aggressive new campaign to boost the bloc’s industry competitiveness.

In the midst of political uncertainty, the leaders of Japan’s main opposition parties are due to meet on Wednesday to consider if they can bridge policy gaps and nominate their own candidate for the country’s prime.