Asian stocks rise as Wall Street extends record week, traders eye Fed policy

Asian shares were broadly higher Monday, extending the optimism from Wall Street’s record week as investors priced in the prospect of continued Federal Reserve rate cuts and a gradual path for central-bank action. In Tokyo, Japan, the Nikkei 225 jumped about 1.5% in morning trading to 45,729.33, rebounding from a late-week dip tied to concerns over potential Bank of Japan sales of its holdings. Market participants treated any BOJ move as likely to unfold gradually, easing some nerves that had followed the lender’s signaling of possible asset sales.

Australia’s S&P/ASX 200 rose 0.4% to 8,811.10, while South Korea’s Kospi gained 0.8% to 3,472.82. Hong Kong’s Hang Seng slipped 0.9% to 26,306.60, and China’s Shanghai Composite was little changed, nudging up less than 0.1% to 3,821.83 as traders weighed policy and growth signals from the world’s second-largest economy. In the United States, benchmarks closed last week with fresh records as the market anticipated further rate reductions from the Fed.

The S&P 500 rose 0.5% to 6,664.36, marking a sixth weekly gain in seven weeks on a rolling basis. The Dow Jones Industrial Average added 172 points, or 0.4%, to 46,315.27, and the Nasdaq composite climbed 0.7% to 22,631.48. All three indices finished the week at all-time highs for a second straight session, a run supported by expectations that the Fed will continue to cut rates to bolster the economy. The central bank delivered its first rate cut of the year last Wednesday, reinforcing the view that borrowing costs may be trimmed again if inflation cooperates and the labor market cools.

If the Fed sustains its planned rate cuts, housing and related sectors could receive an additional lift, offering a potential tailwind for financial markets. Yet investors remain wary that the pace and magnitude of forthcoming cuts could disappoint if inflation does not ease as quickly as hoped or if the central bank signals a slower pace. As traders monitor Fed communications and speeches scheduled this week, they will parse any clues about the trajectory of policy in the months ahead, including how much rate relief might be priced in by equity and bond markets. Jay Woods, chief market strategist at Freedom Capital Markets, cautioned that the market’s momentum can feel relentless but warned against assuming uninterrupted gains: "Every time the market seems to be running out of momentum, it fools most of us by pushing to higher heights. As traders continue to monitor new highs on a daily basis, they are really focused on what Fed officials will have to say as they make the speaking rounds this week."

In the bond market, the yield on the benchmark 10-year Treasury note edged up to around 4.12% last Friday from 4.11% late the previous session, reflecting a steady appetite for government debt alongside higher rate expectations. In energy trading, U.S. crude rose about 34 cents to $63.02 a barrel, while Brent crude, the international benchmark, added roughly 40 cents to $67.08 a barrel. In currency markets, the dollar strengthened to about 148.31 yen from 147.91 yen, and the euro traded around $1.1733 against the dollar.

Further supporting the policy backdrop, Fed officials have signaled more rate cuts are likely this year and next, though concrete timing remains subject to inflation progress and employment data. Fed Chair Jerome Powell said last week that the central bank may have to move quickly if inflation remains stubbornly high even as job growth slows, a nuance that keeps traders watching for fresh cues on the balance between growth and price pressures. As the week unfolds, market participants will also weigh how ongoing tariffs and external pressures could shape inflation trajectories and demand for risk assets.