Asia Stocks Rise as Fed Rate Cut Bets Weigh on Dollar

Asian stocks advanced on Tuesday while the U.S. dollar slipped, as investors anticipated the Federal Reserve would restart its rate-cutting cycle this week. Markets are fully pricing in a 25-basis-point cut at Wednesday’s meeting, with traders also awaiting the Fed’s updated “dot plot” and comments from Chair Jerome Powell for clues on the pace of future easing.

MSCI’s Asia-Pacific index outside Japan climbed to its highest level in more than four years, up 0.3%. Japan’s Nikkei and Topix also hit fresh records. Optimism about rate cuts has buoyed risk sentiment, though analysts warn that with 127 basis points of cuts already priced in through mid-2026, any hint of a hawkish stance could unsettle markets.

In the U.S., Senate confirmation of Stephen Miran to the Fed board and a court ruling protecting Governor Lisa Cook’s position had little market impact. Meanwhile, futures showed muted moves: Eurostoxx 50 slipped 0.09%, FTSE rose 0.08%, and U.S. indexes hovered near record highs after overnight gains.

Tech stocks were in focus as Nvidia shares eased following China’s accusation of anti-monopoly violations, escalating trade tensions. However, Washington and Beijing reported progress on a framework for shifting TikTok to U.S.-controlled ownership, with confirmation expected in an upcoming Trump-Xi call.

Currency markets reflected dollar weakness, with sterling steady at $1.3599 and the euro at $1.1758, close to recent highs. The Australian dollar jumped to a 10-month peak at $0.6677, supported by Fed cut bets and easing trade concerns.

In commodities, Brent crude rose 0.25% to $67.59, while U.S. crude gained 0.22% to $63.44 amid concerns over Ukrainian drone strikes on Russian refineries. Spot gold reached a record $3,689.27 an ounce, fueled by dollar softness and Fed expectations.