Asian markets rose on Thursday as investors extended this week’s rally. The gains came after fresh data from the United States strengthened expectations that the Federal Reserve may begin a new cycle of interest rate cuts.
In recent months, markets worldwide have surged to record or near-record levels. Optimism has grown that the Fed could return to monetary easing to support the economy, which shows signs of slowing. Investors now expect more rate cuts, building confidence across equities.
Last week, US job creation figures came in far below forecasts. A separate report revealed that more than 900,000 fewer new jobs were created in the year through March than previously estimated. These reports signaled weaker labor demand and raised hopes that the Fed would step in with rate reductions.
On Wednesday, the Department of Labor added to this sentiment with its producer price index (PPI) report. The data showed that prices paid to US producers fell in August for the first time since April. Economists had expected a rise, and July’s figures were also revised downward.
The PPI reading eased fears that tariffs on imports would push inflation higher. Many analysts had warned that rising trade tensions could increase consumer prices. Instead, the figures suggested inflationary pressures remain under control, giving the Fed more flexibility.
Markets now turn their focus to the consumer price index (CPI), due later this week. This report will be closely watched because it reflects the cost of goods and services directly paid by consumers. The CPI result could determine both the size and speed of upcoming Fed moves.
Analysts believe a tame reading would strengthen the case for larger rate cuts. Stephen Innes of SPI Asset Management said the PPI results were a red carpet leading to the Fed’s September meeting. He noted that if consumer inflation comes in soft, markets could shift from expecting a small cut to considering a larger half-point reduction.
Market experts have started to factor in a series of reductions. Vincenzo Vedda, global chief investment officer at DWS, forecast up to five cuts by September 2026. Such expectations have lifted global risk appetite, especially in equities.
On Wall Street, Wednesday’s data drove the S&P 500 to another record high. The positive momentum spread across Asia, where several major markets logged strong gains.
Tokyo and Seoul both reached fresh peaks, fueled by investor optimism. Markets in Shanghai, Singapore, Taipei, and Manila also advanced, reflecting broad confidence in regional growth prospects.
Jakarta was among the top performers. Indonesia’s government announced a $12 billion injection into the economy, which boosted local sentiment. The move helped recover losses from earlier in the week, when protests and political changes unsettled the market.
President Prabowo Subianto’s removal of finance minister Sri Mulyani Indrawati had triggered heavy selling on Tuesday. But the government’s stimulus plan restored some confidence and lifted the index above Monday’s close.
Despite the broader rally, not all markets moved higher. Hong Kong retreated after reaching a four-year high, with the technology sector weighing heavily on the index. Sydney and Wellington also posted losses, as did parts of Manila.
Still, the overall trend across Asia leaned positive, driven by hopes of a more supportive US monetary policy.
Looking forward, investors remain cautious yet optimistic. The upcoming CPI report will be key in shaping the Fed’s policy direction. A weaker inflation reading could set the stage for multiple cuts, boosting equities further. But any surprise rise in consumer prices may challenge expectations and dampen market enthusiasm.
For now, global markets continue to trade on US rate cut hopes, balancing weaker economic signals with the promise of central bank support.
