Asian Markets Rise as Investors Eye Fed Cuts and Nvidia Results
Asian share markets climbed on Monday, with investors cautiously optimistic about the likely resumption of US interest rate cuts. At the same time, markets are watching closely for Nvidia’s upcoming earnings report, which could determine whether the AI sector’s lofty valuations remain justified.
Fed Outlook Boosts Market Sentiment
US Federal Reserve Chair Jerome Powell’s dovish shift has led markets to price in an 84% chance of a quarter-point rate cut in September. Traders now expect at least 100 basis points of easing by mid-2026, taking rates down to 3.25–3.5%.
This shift has pushed Treasury yields and the US dollar lower, improving the outlook for corporate profits. However, it also suggests the Fed is increasingly worried about weakening employment and slowing economic growth.
Bruce Kasman, chief economist at JPMorgan, said the move reinforced expectations that the Fed would act in response to softer labour demand. He also noted that global growth risks this quarter were tilting higher.
Inflation Data in Focus
The positive momentum faces a test later this week, with US personal consumption price data due on Friday. Economists expect core inflation to edge up to 2.9%, the highest since late 2023.
Kasman warned that rising service costs, combined with tariff-related pressures, could push core inflation towards an annualised rate of 4%. Any upside surprise would challenge the recent rally in long-term Treasuries, especially as $183 billion in new debt hits the market this week.
Currently, yields on 10-year US Treasury notes hold steady at 4.268%, after sliding 7 basis points on Friday. Investors are also awaiting comments from New York Fed President John Williams later Monday for clues on future policy direction.
Asian Markets Track Wall Street Gains
For now, investors followed Wall Street’s lead. Japan’s Nikkei gained 0.6%, South Korea’s benchmark index rose 0.7%, and Australia’s index added 0.4%.
MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.1%, helped by a further 1% rise in Chinese blue chips. The Chinese index has gained nearly 9% this month, approaching levels not seen since mid-2022.
Nvidia’s Earnings Could Move Markets
The next big market test comes Wednesday, when Nvidia is expected to report a 48% surge in earnings per share on revenue of $45.9 billion. Options pricing suggests the stock could swing by nearly 6% in either direction, a move that would ripple across the broader market given its $4 trillion valuation.
Investors will also watch for updates on Nvidia’s sales in China and details of a deal with US President Donald Trump, which includes a 15% revenue share on some advanced chip sales.
In a related move, Trump announced on Friday that the US would purchase a 9.9% stake in Intel for $8.9 billion, priced at $20.47 per share—below Intel’s $24.80 closing price.
Currency and Commodity Markets Steady
In currency trading, the dollar stabilised at 147.38 yen after falling sharply on Friday. The euro recovered to $1.1698, bouncing from last week’s low of $1.1583.
The European Central Bank is expected to hold rates steady in September, though insiders suggest discussions on future cuts could resume in autumn if growth weakens.
Commodities were supported by the softer dollar. Gold traded at $3,365 an ounce after gaining 1% last week. Oil prices also inched higher, with Brent crude at $67.77 a barrel and US crude at $63.78, helped by stalled Russia-Ukraine talks that keep sanctions in place.
with inputs from Reuters