Asia Stocks Hit Record Highs, Dollar Weakens as Fed Rate Cut Looms

Asian markets surged to multi-year highs on Monday, with the MSCI Asia-Pacific index (excluding Japan) climbing to its strongest level in over four years. Japan’s Nikkei and Topix also posted fresh record highs, fueled by expectations that the Federal Reserve will begin cutting interest rates at its upcoming policy meeting.

The growing anticipation of Fed easing sent the U.S. dollar sliding to its weakest level since late July, while major currencies such as the euro, sterling, and Australian dollar advanced on renewed rate-cut bets.

U.S. Treasury yields remained steady, with the two-year note at 3.53% and the 10-year benchmark at 4.03%. Meanwhile, oil prices rose following Ukrainian drone strikes on Russian refineries, and gold hit a new all-time high as investors flocked to safe-haven assets amid global uncertainty.

Despite political shifts within the Fed — including the Senate’s confirmation of Stephen Miran and a court decision involving Governor Lisa Cook — analysts believe these developments will have little impact on the Fed’s widely expected 25-basis-point rate cut.