Asian stocks climbed on Monday, led by a surge in Chinese shares, as investors bet on U.S. interest rate cuts and waited to see whether Nvidia’s upcoming earnings will justify its sky-high valuation.
Federal Reserve Chair Jerome Powell signaled a softer stance last week, and traders now see an 84% chance of a quarter-point rate cut in September. Markets are also pricing in at least a full percentage point of easing by mid-2025, which would bring rates down to around 3.25–3.5%.
That shift has pulled U.S. Treasury yields and the dollar lower, boosting optimism for corporate profits. But it also suggests the Fed is more concerned about a weakening labor market and broader economic slowdown.
“The news reinforces our view that the Fed will ease in response to softening labor demand,” said Bruce Kasman, chief economist at JPMorgan, adding that global growth risks now tilt to the upside.
The optimism faces a test on Friday when U.S. inflation data is released. Economists expect core consumer prices to rise 2.9% from a year earlier, the highest since late 2023. Kasman warned that a rebound in services and tariff-related pressures could push core inflation closer to a 4% annualized pace, which would complicate the Fed’s path.
Treasury yields were steady on Monday, with 10-year notes at 4.268% after sliding seven basis points on Friday. Investors will also be watching a speech later today from New York Fed President John Williams for more policy clues.
Asian markets rise on China rally
For now, markets in Asia were upbeat. 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 chips were the standout, climbing 1.4% to their highest level since mid-2022. The index has soared nearly 10% this month, fueled by ample liquidity despite sluggish consumer demand and weak pricing power among companies.
All eyes on Nvidia
Wall Street futures were more cautious. S&P 500 and Nasdaq futures dipped 0.1% after Friday’s gains, while European futures also edged lower.
The big focus this week is Nvidia’s earnings, due Wednesday. Analysts expect a 48% jump in profit and $45.9 billion in revenue for the chipmaker’s fiscal second quarter. Options traders are bracing for a swing of nearly 6% in the stock, which has a massive $4 trillion valuation.
Investors will also be listening for updates on Nvidia’s shipments to China and its agreement with President Donald Trump’s administration to pay 15% of revenue from some chip sales there.
In related news, Trump announced Friday that the U.S. will buy a 9.9% stake in Intel for $8.9 billion, or $20.47 per share about $4 below its market price.
Dollar, commodities steady
In currency markets, the dollar held at 147.36 yen after a sharp drop on Friday, while the euro recovered to $1.1703. The European Central Bank is expected to keep rates unchanged next month, though officials may revisit cuts if the economy weakens further.
A softer dollar boosted commodities. Gold held at $3,365 an ounce after last week’s rally, while oil prices ticked higher on ongoing tensions between Russia and Ukraine. Brent crude traded at $67.77 a barrel and U.S. crude at $63.78.
