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Asian stocks surged on Monday, with broad-based gains across major markets driven by optimism over an expected U.S. Federal Reserve rate cut this week and tentative signs of a U.S.–China trade truce. The rally followed a record-setting close on Wall Street, fueling risk appetite across the region.
By 02:53 GMT, U.S. stock futures also edged higher during Asian trading, extending the upbeat tone ahead of a potentially pivotal week for global markets.
Fed Rate Cut Expectations Drive Momentum
Markets widely anticipate that the Federal Reserve will deliver a 25-basis-point rate cut at the end of its policy meeting on Wednesday, after U.S. inflation data for September came in softer than expected.
Investors have already priced in the move, with focus now shifting to guidance on future cuts and the Fed’s tone on inflation and growth. The prospect of lower U.S. interest rates has provided strong support to equities, commodities, and emerging market currencies.
Trade Truce Progress Lifts Risk Sentiment
Investor confidence received a further boost after U.S. and Chinese negotiators reached a preliminary trade framework over the weekend in Kuala Lumpur, paving the way for potential progress at the upcoming Trump–Xi summit in South Korea.
Both sides agreed to pause new tariffs and suspend China’s rare earth export restrictions, U.S. Treasury Secretary Scott Bessent confirmed. President Donald Trump expressed optimism on Sunday, saying he believed a “deal with China” was close.
The news reinforced expectations that the world’s two largest economies may finally stabilize trade relations after months of escalating tensions.
Japan and South Korea Lead Regional Gains
Japan’s Nikkei 225 soared over 2%, breaking through the 50,000-point mark for the first time and reaching an intraday high of 50,491.23. The broader TOPIX index also gained 1.7%, setting a new record at 3,328.3.
Investors remain encouraged by the policies of new Prime Minister Sanae Takaichi, who is preparing a large-scale fiscal package aimed at inflation relief and household support, continuing Japan’s pro-growth stance.
In South Korea, the KOSPI jumped 2.3% to 4,038.39, setting another record high as heavyweight chipmakers Samsung Electronics and SK Hynix advanced strongly on expectations of robust semiconductor demand.
China and Hong Kong Extend Gains
Mainland Chinese markets advanced on optimism over the trade breakthrough. The Shanghai Shenzhen CSI 300 rose 0.7%, while the Shanghai Composite gained 0.8%.
In Hong Kong, the Hang Seng Index climbed 1%, boosted by a 1.2% gain in the Hang Seng TECH sub-index, as Chinese tech giants rebounded following recent volatility.
Broader Asia in Positive Territory
Elsewhere, Australia’s S&P/ASX 200 and Singapore’s Straits Times Index both rose 0.4%, supported by strength in resource and banking shares.
India’s Nifty 50 futures also edged higher before the market open, signaling a positive start to the session.
Outlook
With optimism surrounding a Fed rate cut, a potential U.S.–China trade truce, and record highs in Japan and South Korea, Asian markets are entering the week on a strong footing. However, traders remain cautious ahead of the Fed’s policy statement and press conference, which could determine the trajectory of global risk sentiment through the rest of October.
