Asian shares rise as Fed rate cut hopes boost sentiment across markets

Asian shares mostly rose Tuesday as hopes grew, also on Wall Street, that US data reports set for release later in the week would lead the Federal Reserve tocut interest rates at its next meeting.

Japan's benchmark Nikkei 225 edged up nearly 0.3 per cent in morning trading to 43,763.96. Australia's S&P/ASX 200 declined 0.5 per cent to 8,806.60. South Korea's Kospi climbed 0.6 per cent to 3,238.07. Hong Kong's Hang Seng surged 1.2 per cent to 25,949.48, while the Shanghai Composite rose 0.1 per cent to 3,831.45.

Asian markets opened Tuesday with momentum, riding Wall Street's conviction that Fed cuts are no longer a question of if but how many. Nearly three reductions are now being priced before year-end. That expectation is washing through global markets like a spring tide, said Stephen Innes, managing partner at SPI Asset Management.

 

On Wall Street, the S&P 500 added 0.2 per cent and finished just below its record set last week. The Dow Jones Industrial Average rose 114 points, or 0.3 per cent, and the Nasdaq composite climbed 0.5 per cent to its own all-time high.

AppLovin and Robinhood Markets helped lead the market after learning they will join the S&P 500 index later this month, along with Emcor Group. Many investment funds directly mimic the index or at least compare their performance against it, so a stock's joining the list of the 500 largest companies can draw investors' dollars immediately.

AppLovin climbed 11.6 per cent and Robinhood jumped 15.8 per cent while Emcor slipped 0.6 per cent. They will replace three companies that have shrunk enough in size to get demoted to S&P's index of small stocks, the SmallCap 600. Those stocks, MarketAxess Holdings, Caesars Entertainment and Enphase Energy, ranged from a loss of 2.1 per cent to a gain of 0.2 per cent.

EchoStar jumped 19.9 per cent after saying it agreed to sell spectrum licenses to Elon Musk's SpaceX for $17 billion in cash and stock. SpaceX also agreed to pay for roughly $2 billion of interest payments on EchoStar debt through November 2027.

The deal will help SpaceX's Starlink business develop direct-to-cell service, and it knocked down stocks of several telecoms. Verizon sank 2.4 per cent and AT&T dropped 2.3 per cent.

All told, the S&P 500 rose 13.65 points to 6,495.15. The Dow Jones Industrial Average added 114.09 to 45,514.95, and the Nasdaq composite climbed 98.31 to 21,798.70 and topped its prior all-time high set in August.

Trading across most of the market was relatively quiet ahead of updates coming later this week on the economy and inflation. They could alter expectations among traders, who at the moment are unanimously forecasting the Fed will cut its main interest rate for the first time this year at its meeting two Wednesdays from now.

The Fed has been more worried about the potential of inflation worsening because of President Donald Trump's tariffs than about the job market. But a slew of recent reports showing the US job market is slowing may be changing minds.

On Tuesday, the US government will release preliminary revisions for job growth numbers reported through March, and it could show that hiring was weaker than earlier thought.

Reports on inflation will follow on Wednesday and Thursday, showing how much prices rose last month at wholesale and consumer levels. If inflation proves to be worse than expected, it could tie the Fed's hands.

In the bond market, Treasury yields continued to ease as expectations remain high for the Fed to cut interest rates. The yield on the 10-year Treasury fell to 4.04 per cent from 4.10 per cent late Friday and from 4.28 per cent last Tuesday.

In energy trading, benchmark US crude gained 25 cents to $62.51 a barrel. Brent crude, the international standard, added 27 cents to $66.29 a barrel.

In currency trading, the US dollar slipped to 147.24 Japanese yen from 147.51 yen. The euro cost $1.1780, up from $1.1765.