Asia Stocks Hit Four-Year Highs as Dollar Slips; Investors Await Fed Rate Cut Decision

Asian equities surged to multi-year highs on Tuesday while the U.S. dollar weakened, as global investors positioned for an anticipated interest rate cut by the U.S. Federal Reserve. Market sentiment brightened across the region with traders betting the Fed would resume its easing cycle this week, leaving room for additional cuts later in the year.

The political backdrop added intrigue to the Fed’s upcoming decision. The U.S. Senate narrowly confirmed Stephen Miran to the Fed’s Board of Governors, while an appeals court blocked President Donald Trump from firing Fed Governor Lisa Cook. Analysts said both developments were unlikely to sway Wednesday’s policy outcome, where a quarter-point cut is already fully priced in.

“Concerns over the politicisation of the Fed and pressure from the White House have certainly grown, but markets still expect a 25-basis-point cut,” said Tony Sycamore, market analyst at IG. Expectations of looser policy have buoyed risk appetite for several sessions, sending stock indices across Asia to new peaks.

MSCI’s broadest index of Asia-Pacific shares outside Japan hit a more than four-year high, gaining 0.7% in early trade. Japan’s Nikkei and Topix also reached fresh records, while Hong Kong’s Hang Seng edged up 0.08%. China’s CSI300 dipped 0.38% as domestic pressures weighed. In Europe, futures were mixed: EUROSTOXX 50 was flat, FTSE gained 0.08% and DAX edged up 0.03%.

Investors will also parse the Fed’s updated “dot plot” and Chair Jerome Powell’s guidance for clues on the pace of future easing. Futures currently price in about 127 basis points of cuts by July 2026, making any hawkish surprise a potential shock. Meanwhile, Wall Street futures hovered near record highs, Nvidia shares softened after new Chinese antitrust claims, and Washington and Beijing announced a framework deal to shift TikTok to U.S. ownership, signaling progress in trade tensions.

source: reuters