Asian Stocks Rally on Fed Rate Cut Hopes, AI Boom and Safe-Haven Gold Demand
Asian stock markets are on track for solid weekly gains as investors bet on a near-term interest rate cut by the U.S. Federal Reserve. The optimism has helped global equities brush aside concerns over the ongoing U.S. government shutdown, which has disrupted key economic reports and temporarily stalled federal operations. The rally has been further fueled by investor enthusiasm for artificial intelligence (AI), sending Wall Street’s major indexes to fresh record highs and lifting Asian shares in early Friday trading.
The MSCI Asia-Pacific index gained 0.3% to notch a new record, setting up a 2.3% weekly rise and extending its 2025 rally to 23%. Japan’s Nikkei jumped 1.5% ahead of a critical leadership vote that could shape fiscal and monetary policy, while Taiwan’s benchmark also reached new highs on AI-driven tech stock momentum. European futures pointed higher, with investors eyeing manufacturing data across the continent after the pan-European STOXX 600 closed at a record earlier in the week.
Despite the shutdown—the 15th since 1981—investors appear largely unfazed. Market strategists say the disruption, which halted scientific research and delayed crucial reports like Friday’s U.S. jobs data, has historically had little long-term impact on markets. Still, analysts warn that a prolonged standoff in Washington could shift sentiment. “For now, investors remain focused on the Fed’s rate-cut path, trade, and corporate earnings rather than the shutdown,” said Weiheng Chen, strategist at J.P. Morgan Private Bank.
With no official jobs report available, markets have leaned on alternative private data pointing to a sluggish labor market. Traders are now almost fully pricing in a 25-basis-point Fed rate cut in October, with expectations of over 100 basis points of easing by 2026. The dollar has come under pressure, setting up its sharpest weekly drop since August, while the Japanese yen posted its strongest weekly performance since May.
Commodities saw mixed moves. Gold, often seen as a safe haven in uncertain times, eased slightly to $3,845 per ounce but remains near record highs and is on course for a seventh straight week of gains. The precious metal has surged 47% this year, boosted by falling bond yields and skepticism over the dollar’s dominance. Oil prices inched higher on Friday but were still headed for their steepest weekly loss in three months, with Brent crude at $64.51 a barrel and U.S. WTI at $60.85.
source: reuters