Asian Stocks Soar to One-Month High After Federal Reserve’s Rate Cut and Less-Hawkish Outlook Spurs Investor Optimism

Asian stock markets closed sharply higher, tracking record gains on Wall Street, as investors continued to react positively to the Federal Reserve’s (Fed) latest decision to cut interest rates. The market rally was driven by the expectation that the easing financial conditions will provide a tailwind for global equities and bolster the US economy.

The widely expected quarter-point rate reduction, which was the Fed’s third consecutive cut this year, was announced on Wednesday. However, the subsequent optimism was truly cemented by the comments from Fed Chair Jerome Powell, who managed to strike a tone that was “less hawkish than feared,” despite the Fed’s “dot plot” maintaining an outlook for only one more cut in 2026. Powell’s confidence in the US economy strengthening next year helped push global stocks to a fresh record.

Major regional indices posted significant gains, with the MSCI index of Asian shares jumping 1.3%. Japan’s Topix index led the regional surge, trading at an all-time high, while Hong Kong’s Hang Seng Index (HSI) added over 1.48\%. Markets in South Korea and Australia also gained more than one percent, as export-oriented stocks were buoyed by the prospect of improved US growth and a weakening US dollar. Lower US rates tend to decrease the value of the dollar, making Asian exports more competitive globally.

Despite the broad-based gains, investor sentiment remained somewhat cautious regarding the highly-valued technology sector, with some analysts pointing to disappointing earnings from US tech companies and persistent worries that the AI-led rally may be overextended. Nevertheless, the general consensus among analysts is that the Fed’s current policy stance supports a “Goldilocks” scenario combining sufficient global growth with easing financial conditions, which is proving highly favorable for Asian risk assets.