By Rae Wee
SINGAPORE (Reuters) -Asia stocks rose on Tuesday, buoyed by expectations of a U.S. rate cut as early as next week, even as political upheavals around the world kept currency and bond investors on edge.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.2% in early trade, taking its cue from Wall Street’s positive lead overnight that saw the Nasdaq notch a record-high close.
Nasdaq futures extended the rally from the cash session and were last up 0.06%, while S&P 500 futures similarly ticked up 0.05%.
Breathing new life into the equities rally were expectations that the Federal Reserve would ease rates when it meets next week, following Friday’s dismal U.S. jobs report.
While consumer and producer price inflation data remain on deck in the week ahead, investors are betting that a 25-basis-point cut this month is a done deal, with focus now on whether the Fed could deliver a larger 50bp move.
The U.S. Labor Department will also report a preliminary revision estimate to the employment level for the 12 months through March later in the day.
“Both publications are poised to influence the central bank’s pace down the monetary policy stairs,” said Jose Torres, senior economist at Interactive Brokers, referring to the PPI and CPI figures.
“A heavy subtraction from the worker roster alongside a downside miss on the CPI is likely to raise the odds of a half-percent to a coin flip.”
Markets are now pricing in just over a 10% chance the Fed could lower rates by 50bp this month, compared to none a week ago, according to the CME FedWatch tool.
Elsewhere, European futures eased after benchmark indexes clocked gains in the cash session on Monday.
EUROSTOXX 50 futures fell 0.17%, while FTSE futures and DAX futures eased 0.04% and 0.22%, respectively.
Japan’s Nikkei jumped nearly 1%, aided by a weaker yen and following the resignation of the country’s Prime Minister Shigeru Ishiba, a fiscal hawk.
U.S. tariffs on Japanese goods including cars and auto parts are set to be lowered by September 16, Japan’s tariff negotiator Ryosei Akazawa said in an X post on Tuesday.
POLITICAL TURMOIL
Renewed uncertainty over the political landscape across various economies have rattled currency and bond markets in the past few sessions.
From Ishiba’s resignation in Japan, the ousting of French Prime Minister Francois Bayrou, a heavy election defeat for Argentina President Javier Milei’s ruling party to the abrupt replacement of Indonesia’ finance minister, investors had lots to consider.
