Asian Markets Rally on US Rate-Cut Optimism

Asian equity markets opened in the green on Friday, buoyed by rising hopes that the US Federal Reserve will soon begin cutting interest rates. Japan’s Nikkei surged by 721 points (up about 1.6 per cent) to reach 45,675, while South Korea’s Kospi climbed 2.7 per cent, adding 93 points to trade near 3,549. In China, the Shanghai Composite and Shenzhen Component rose by 0.5 per cent and 0.3 per cent respectively. Hong Kong’s Hang Seng index bucked the trend, slipping 0.87 per cent to around 27,049.

Markets were further bolstered by widespread excitement over artificial intelligence (AI) investments. In Tokyo, shares of Hitachi vaulted more than 9 per cent after the company announced a strategic partnership with OpenAI covering AI, energy, and related domains. Other Japanese tech names followed suit: Renesas, Sony, Advantest and SoftBank all recorded gains in the 2.8–3 per cent range.

Broader Drivers and Risks Ahead

Behind the rally lies investor confidence in a cooling US labour market that may prompt the Federal Reserve to ease borrowing costs. The slowdown in jobs growth has heightened speculation that the US central bank will initiate rate cuts soon.

Meanwhile, the surge in global AI investment has become a powerful tailwind for tech sectors. Samsung and SK hynix recently struck preliminary agreements to supply chips and equipment to OpenAI’s “Stargate” project, further stoking investor appetite for semiconductor and AI plays.

That said, challenges remain. Markets are sensitive to shifts in US economic data, central-bank signals, and geopolitical developments. A stronger‐than‐expected US jobs report or hawkish comments from Fed officials could unsettle sentiment. In addition, valuations in leading tech names are already high, and any disappointment in execution or demand could trigger corrections.

In sum, Asia’s equity markets are currently riding two main themes — rate-cut optimism and AI hype. Whether that momentum holds will depend heavily on forthcoming US economic cues and the ability of high-growth firms to justify lofty valuations.