Asian stocks advanced on Monday, led by Chinese markets, as investors cautiously welcomed the prospect of renewed U.S. interest rate cuts. Optimism also centered on Nvidia’s upcoming earnings report, which many hope will justify the company’s sky-high valuation.
Federal Reserve Chair Jerome Powell’s dovish remarks shifted expectations, with futures now pricing in an 84% chance of a quarter-point rate cut in September and over 100 basis points of easing by mid-2026. This outlook pushed U.S. Treasury yields and the dollar lower, boosting hopes for stronger corporate earnings. At the same time, it signaled that policymakers may see rising risks to both employment and overall economic growth.
JPMorgan’s global research head Bruce Kasman noted that the Fed appears ready to ease policy in response to weakening labor demand, though he warned that the risk of a slowdown in global growth remains high. Investors will also be closely watching Friday’s U.S. inflation data, which is expected to show core prices rising to 2.9%, their highest level since late 2023. Kasman cautioned that tariff pressures and rising service costs could push annualized core inflation closer to 4%.
Bond markets remain sensitive to these shifts. The 10-year U.S. Treasury yield held at 4.268% after falling 7 basis points on Friday. Investors are also focused on upcoming remarks from New York Fed President John Williams, who could offer more insight into the policy outlook.
In equity markets, Japan’s Nikkei rose 0.4%, South Korea’s Kospi gained 1.1%, and Australia’s benchmark added 0.2%. MSCI’s broad index of Asia-Pacific shares outside Japan jumped 1.5%. Chinese blue-chip stocks climbed 1.4% to their highest level since mid-2022, supported by a liquidity-driven rally that has lifted the index nearly 10% so far this month despite weak domestic demand and limited pricing power among companies.
Attention is now turning to Nvidia, which reports earnings on Wednesday. Analysts expect a 48% jump in earnings per share on revenue of $45.9 billion. With a market value above $4 trillion, the results could trigger significant volatility, with options markets implying a potential 6% swing in either direction. Investors are particularly interested in Nvidia’s sales outlook for China and its agreement with President Donald Trump to share 15% of some chip revenues with the U.S. government.
Trump also revealed plans for the U.S. to acquire a 9.9% stake in Intel for $8.9 billion, priced at $20.47 per share—a discount to its recent market price of $24.80.
In currency trading, the dollar steadied at 147.36 yen after sliding 1% on Friday, while the euro recovered to $1.1703. The European Central Bank is expected to keep rates unchanged in September, though further cuts could be discussed later this year if growth falters.
Commodities benefited from dollar weakness, with gold at $3,365 per ounce after last week’s 1% surge. Oil also found support as negotiations between Russia and Ukraine stalled, keeping sanctions on Russian supply in place. Brent crude traded at $67.77 a barrel, while U.S. crude edged up to $63.78.
