A dealer walks past screens showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Monday, Aug. 25, 2025. (AP Photo)
Asian shares surged on Monday, mirroring Wall Street’s strong rebound after Federal Reserve Chair Jerome Powell suggested interest rate cuts could be on the horizon.
Powell, speaking at the annual Jackson Hole conference in Wyoming on Friday, acknowledged fresh risks to the U.S. labor market. A weaker-than-expected jobs report earlier this month intensified expectations that the Fed may cut rates as soon as September.
Lower borrowing costs typically encourage investment and spending, fuelling optimism across global markets.
Strong Gains Across Asia
Hong Kong’s Hang Seng index climbed 2.1% to 25,866.49, while the Shanghai Composite advanced 0.9% to 3,858.59 — marking its highest level in a decade. This came despite lingering concerns about U.S. tariffs under former President Donald Trump and weaker consumer demand in China.
Taiwan’s Taiex outperformed with a 2.5% rise, powered by a 3.1% gain in chipmaker TSMC Corp. Tokyo’s Nikkei 225 edged 0.3% higher to 42,767.41, led by semiconductor-related stocks.
In Seoul, South Korea’s Kospi index rose 1.1% to 3,204.48. Australia’s S&P/ASX 200 added 0.2%, while Thailand’s SET index increased by 1%.
Analyst Stephen Innes of SPI Asset Management noted that Asia was “playing catch-up,” taking cues from Wall Street’s late-week surge after Powell’s remarks.
Focus on Nvidia Earnings
Investor attention is also turning to Nvidia, whose earnings report is due Wednesday. The chip giant has become a critical supplier in artificial intelligence technology, making its performance a bellwether for broader market sentiment.
Nvidia’s stock rose 1.7% Friday, easing some of the week’s losses. Despite criticism of inflated valuations among AI firms, its role in powering the AI revolution keeps it under close watch.
Wall Street’s Rebound Fuels Optimism
On Friday, the S&P 500 jumped 1.5% to 6,466.91, snapping a six-day losing streak and closing just below its record high. The Dow Jones Industrial Average soared 846 points, or 1.9%, to an all-time high of 45,631.74. The Nasdaq composite also gained 1.9% to 21,496.53.
Smaller companies saw the biggest gains, with the Russell 2000 index surging 3.9% — its strongest day since April. These firms often benefit more from lower rates due to higher borrowing needs.
Powell Remains Cautious
Despite growing market optimism, Powell stopped short of committing to a timeline for cuts. He said the labor market remained resilient but described it as “a curious kind of balance” with fewer new jobs and fewer new workers.
Inflation, meanwhile, still looms as a risk. “The path forward is uncertain,” Powell cautioned.
Bond markets reacted strongly. The 10-year Treasury yield fell to 4.25% from 4.33%, while the two-year yield — more sensitive to Fed policy expectations — dropped sharply to 3.69% from 3.79%.
Corporate Moves and Market Drivers
Chipmaker Intel gained 5.5% Friday after Trump announced the U.S. government would take a 10% stake in the company. The deal, aimed at strengthening domestic semiconductor production, lifted investor sentiment in the sector.
Oil prices saw minor gains. U.S. benchmark crude added 8 cents to $63.74 per barrel, while Brent crude rose 4 cents to $67.26.
Currency markets were mixed. The U.S. dollar advanced to 147.22 yen from 146.88 yen, while the euro dipped slightly to $1.1707 from $1.1727.
Global Investors Eye September
Markets are now looking ahead to the Fed’s September meeting, where speculation of a rate cut is intensifying. Traders remain hopeful that easier borrowing conditions could extend the rally across both Wall Street and Asian markets.
For now, investors are balancing optimism about potential stimulus with lingering worries over inflation and trade tensions. But as Powell’s remarks sparked relief, the rally underscored how closely global markets remain tied to Fed policy.
