Asia Extends Winning Streak as Fed Cut Expectations Firm Up

Asian equities advanced for a third straight session on Wednesday, mirroring gains on Wall Street as deteriorating U.S. consumer data strengthened expectations for a Federal Reserve rate cut next month. Benchmarks in Japan, South Korea and Australia all opened higher after the S&P 500 climbed 0.9% and the Nasdaq 100 added 0.6%.

Chinese equities will be closely watched after Alibaba Group’s U.S.-listed shares declined following its earnings release.

Treasuries eased after sharp gains in the prior session, which were driven by reports placing White House National Economic Council director Kevin Hassett as the leading candidate to become the next Fed chair. The dollar slipped to a one-week low, according to a Bloomberg measure.

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Cooling U.S. Data Reinforces Rate-Cut Narrative

Equities regained momentum as U.S. consumer confidence posted its sharpest drop since April, while September retail sales picked up only modestly. The delayed batch of economic data, caused by a government shutdown, reinforced market conviction that the Fed could move in December, despite Chair Jerome Powell’s earlier caution that a cut is not guaranteed.

Strategists warn that the rebound lacks solid footing. Pepperstone’s Dilin Wu described the rally as “largely emotion and short-covering,” noting that markets are operating with incomplete data. The durability of the upswing depends on whether upcoming releases continue to support a soft-landing scenario.

Fed Governor Stephen Miran added to dovish expectations by reiterating his view that meaningful rate reductions are needed to sustain the U.S. economy. While the central bank typically moves in 25-basis-point increments, historical precedents show that larger 50-basis-point shifts remain possible.

As rate-cut bets intensified, the 10-year Treasury yield briefly dipped below 4% for the first time in nearly a month. Traders also firmed expectations of deeper cuts over the coming year, reflecting speculation that a Hassett-led Fed may align more closely with President Donald Trump’s push for aggressive easing.

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Global Policy Landscape in Focus

Attention will also turn to the UK, where Chancellor of the Exchequer Rachel Reeves is set to deliver her budget statement.

In Asia, a weakening yen is raising the probability of a Bank of Japan rate hike. The currency recently touched a 10-month low, adding inflation pressure through higher import costs. A former central bank executive director noted that continued depreciation could force the BOJ to act as soon as next month.

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Commodities and Currencies

Oil steadied after settling at a one-month low amid signs of progress in peace negotiations related to Ukraine. Gold inched higher, benefiting from the prospect of lower rates.

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Corporate Highlights

Alibaba Group reported 34% growth in its cloud segment, exceeding projections, though overall profit fell sharply due to increased spending on consumer subsidies and data-centre investments tied to the accelerating artificial intelligence cycle.

HP Inc delivered a profit outlook below expectations and announced plans to cut 4,000–6,000 jobs by fiscal 2028 as it expands its use of AI technology.

Dell Technologies lifted its annual forecast for the AI server market, signalling robust and sustained demand for high-performance computing systems.

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Market Snapshot

Stocks

• S&P 500 futures: little changed (as of 9:16 a.m. Tokyo)

• Hang Seng futures: +0.3%

• Japan Topix: +1.1%

• Australia S&P/ASX 200: +1%

• Euro Stoxx 50 futures: +0.6%

Currencies

• Bloomberg Dollar Spot Index: little changed

• Euro: US$1.1566

• Japanese yen: 156.23 per dollar (-0.1%)

• Offshore yuan: 7.0849 per dollar

• Australian dollar: US$0.6471

Cryptocurrencies

• Bitcoin: US$87,390.45 (+0.4%)

• Ether: US$2,954.24 (+0.8%)

Bonds

• U.S. 10-year Treasury yield: 4.00% (little changed)

• Australia 10-year yield: 4.44% (+1 bp)

Commodities

• WTI crude: US$58.02 (+0.1%)

• Spot gold: US$4,139.62 (+0.2%)