Asian Markets Rise as Traders Anticipate US Rate Cut

Asian equities climbed on Tuesday, following yet another record-setting day on Wall Street, as investors positioned themselves for a widely expected US interest rate cut this week. Traders are also keeping a close watch on the upcoming discussions between Donald Trump and Xi Jinping, which have raised hopes of easing tensions between the two economic giants.

The Federal Reserve’s policy decision, due Wednesday, is regarded as a virtual certainty. However, the real debate now lies in the bank’s future course of action, especially its “dot plot” — a projection of where officials see borrowing costs heading in the coming years.

Investors are also bracing for Jerome Powell’s post-meeting remarks, expected to provide insight into the Fed’s assessment of the slowing US labour market and persistently high inflation.

Stephen Innes of SPI Asset Management explained:

• “Jobless claims and unemployment are at their highest since 2021, and for the first time in four years, there are more job seekers than jobs. That single ratio tells the Fed all it needs to know: rate cuts are back on the runway.”
• He added: “Mortgage payments have nearly doubled from pre-Covid levels, affordability is at record lows, and rents are soaring. This feedback loop eats into consumption, profits, hiring, and confidence.”

The meeting also marks the entry of Stephen Miran, a Trump appointee, to the Fed’s Board of Governors and the Federal Open Market Committee. Cleared by the Republican-majority Senate on Monday, Miran also chairs the White House Council of Economic Advisers. His arrival coincides with President Trump’s renewed pressure on Powell, whom he accuses of being “unfit for the job”, while demanding urgent rate cuts.

Asian markets reacted positively in early trade:

On Wall Street, both the S&P 500 and Nasdaq surged to record levels overnight.

Currency and Commodity Update (as of 0230 GMT)

Adding further momentum, President Donald Trump announced on Truth Social that he would speak to Chinese President Xi Jinping later this week. The talks are expected to finalise a framework deal addressing the ongoing TikTok dispute, which US officials say will be confirmed by both leaders on Friday.

The announcement came after two days of high-level discussions in Madrid, where US and Chinese officials also addressed broader trade issues. Trump posted that the negotiations were going “VERY WELL”, bolstering investor optimism.