Asian stock markets climbed on Friday, mirroring Wall Street gains, as expectations of multiple U.S. Federal Reserve rate cuts lifted investor sentiment worldwide. Lower borrowing costs are seen as a major relief for global bond markets, while the U.S. dollar eased slightly.
Indexes in Japan, South Korea, and Taiwan hit record highs, supported by optimism around artificial intelligence earnings. Japan’s Nikkei rose 0.6% for the day and 3.7% for the week, while South Korea jumped 1.1%, adding more than 5% weekly. Chinese blue chips reached their strongest levels since early 2022, while MSCI’s Asia-Pacific index excluding Japan gained 1.2%.
The latest U.S. inflation data showed consumer prices staying moderate, reinforcing expectations of policy easing. Analysts at Citi now forecast core PCE inflation holding at 2.9% in August, supporting their outlook for 125 basis points of Fed cuts over the next five meetings. Markets are pricing in a 100% chance of a September cut to 4.00%-4.25%, with a strong likelihood of additional reductions this year. U.S. Treasury yields fell 20 basis points in two weeks, easing mortgage rates and boosting risk appetite.
European shares also rallied, with EUROSTOXX 50, FTSE, and DAX futures up 0.3%. The European Central Bank kept rates unchanged, calling policy “in a good place.” Analysts at JPMorgan expect a possible cut in December, though markets see limited odds of further easing.
In currency trade, the dollar held at 147.23 yen, while the euro firmed near $1.1730. Gold stayed steady at $3,633 an ounce, just below record highs. Oil prices weakened, with Brent at $66.09 and U.S. crude at $62.07, after the IEA warned of a record surplus in 2025 as OPEC output rises.