Asian Stocks Hit Record High as Fed Meeting Looms; Oil Steady, Dollar Soft

Asian markets started the week strongly on Monday, supported by optimism over potential U.S. interest rate cuts. Japan’s Nikkei added 0.9% to set another record high, and Taiwan stocks touched new peaks as well.

Blue-chip stocks in China rose 1.3%, nearing their highest point in 10 months. The MSCI Asia-Pacific index outside Japan rose 0.5%, adding to last week’s four-year high.

European markets were also strong in early trading, with Euro Stoxx 50 futures and Germany’s DAX futures up 0.2% each, as FTSE futures gained 0.3%. Stock futures in the United States rose slightly, with the S&P 500 and the Nasdaq creeping closer to their existing record levels.

Focus on Fed and Jackson Hole

Investors are focused on the Federal Reserve’s annual Jackson Hole symposium from Aug. 21 to 23. Jerome Powell, the Fed chair, is expected to provide more details on the central bank’s plans around inflation and employment, but analysts say he may avoid signaling a clear September move. Markets currently expect an 85% chance of a quarter-point rate cut next month and another cut by the end of the year.

The prospect of lower borrowing costs worldwide has been a crucial source of fuel for stocks, driving global benchmarks higher in recent weeks. Yet, investors are waiting for U.S. jobs and inflation data for greater clarity on Fed policy.

Earnings Support Wall Street

Results from companies continue to play a crucial role in supporting markets. The S&P 500 companies reported an 11% earnings-per-share increase from a year earlier, with nearly 60% raising full-year outlooks. Tech giants, meanwhile, retained their status as standout performers, with analysts at Goldman Sachs noting that the “Magnificent 7” saw profits jump by 26% in the second quarter.

That will begin this week as attention shifts to consumer-focused companies, with Home Depot, Target, Lowe’s, and Walmart all set to report. Their results will offer investors more hints about household spending and the overall health of the American economy.

Currencies and Commodities

The dollar held near recent lows as rate cut expectations weighed.. It was 147.41 yen, and the euro was flat at $1.1704. The dollar index was last at 97.85 against a basket of currencies, after a 0.4% drop last week.

Gold advanced 0.5% to $3,343 an ounce after last week’s decline. Oil prices remained in check as concerns over tighter Russian supply subsided. Brent crude declined 0.1% to $65.78 a barrel, and U.S. crude was steady at $62.73.