Most Asian Markets Rise as Traders Anticipate Fed Rate Cut

AFP/APP

Hong Kong: Asian markets largely saw gains on Friday, with the yen holding steady at nine-month highs, following a positive day on Wall Street. Investors are gearing up for an anticipated U.S. interest rate cut next week.

Encouraging data indicating that the Federal Reserve is making progress in its battle against inflation gave equities an additional boost. This came after a tumultuous week marked by significant losses due to concerns that the world’s largest economy might be facing a recession.

Despite ongoing worries from a disappointing US jobs report last Friday, and another below-forecast report a month prior, traders are focusing on the Federal Reserve’s upcoming decision on September 18.

The Fed, which cut rates early in the pandemic and then raised them in 2022 as inflation surged, had maintained high rates for a year, reaching a two-decade peak. With signs of disinflation and a softening labor market, there is speculation on whether the Fed will implement a 25 or 50 basis point cut.

Data released on Thursday showed wholesale prices rose 0.2 percent in August, with the annual rate at 1.7 percent, down from a revised 2.1 percent the previous month. Excluding volatile food and energy components, prices increased by 0.3 percent, exceeding forecasts.

The core consumer price index, while hitting its lowest level since February 2021, also showed a higher-than-expected increase from the previous month. Despite these mixed signals, the data did little to change the expectation of a rate cut but made a larger reduction less likely.

Wall Street, buoyed by confidence in a Fed rate cut, saw support for the key tech sector, with the Nasdaq up one percent.