August 15, 2025

Asian stock markets showed a mixed picture on Thursday, wobbling after strong recent gains. Why? Investors are eagerly waiting for a possible interest rate cut by the US Federal Reserve. Japanese stock indexes slipped, while South Korea’s stock market marched ahead. Meanwhile, Chinese stocks grabbed attention after US-listed Chinese shares, boosted by Tencent Holdings Ltd’s solid earnings, rose for the second day straight. US stocks reached a dazzling new high, with giants like Apple and Amazon leading the charge. Bitcoin too soared to an all-time peak, adding to the market excitement. In bond markets, US Treasuries stayed steady after a recent rally, and the US dollar slipped for the third day in a row. Why this frenzy? Traders now fully expect the Federal Reserve to cut interest rates by a quarter of a percentage point soon. This comes after mild inflation data stirred hopes. Treasury Secretary Scott Bessent pushed hard for the Fed to cut rates, saying officials might have acted quicker if they had seen early labor market data. He boldly said, "We could go into a series of rate cuts here, starting with a 50 basis-point rate cut in September." Ulrike Hoffmann-Burchardi from UBS Global Wealth Management shared, "As the labor market continues to weaken, we think the US central bank will resume interest rate cuts next month, with 25-basis-point cuts at each meeting through January 2026 for a total of 100 basis points." Last month, the Fed kept interest rates steady between 4.25% and 4.5%. But there’s talk the Fed might turn more dovish next year, especially if Chair Jerome Powell leaves his post, says strategist Jane Foley from Rabobank. Adding spice to the mix, Bessent criticized the Bank of Japan for lagging behind in fighting inflation, with the yen strengthening 0.4% against the dollar on Thursday. Over in Washington, President Donald Trump, known for his Fed critiques, teased that he might name the next Fed chair "a little bit early," and has three to four candidates lined up to replace Powell. Investors also keep their eyes peeled for a Thursday report on producer prices, which feeds into the Fed’s favorite inflation gauge set to be released later this month. Ian Lyngen from BMO Capital Markets put it simply: "As the market continues to digest the shift in the trajectory of the real economy following the combination of July’s inflation and employment data, it follows intuitively that the question has become: how large of a cut should Powell deliver?" On the global trade front, Trump’s controversial idea to cut revenue from chip sales to China is making US companies rethink their China business plans, adding to the trade drama between the countries. Meanwhile, the geopolitical temperature remains high after Trump warned of "very severe consequences" for Vladimir Putin if no ceasefire deal is made soon. This warning came just after Trump’s talks with European leaders ahead of Putin’s planned meeting. So, what’s the buzz? Asian stocks dance cautiously, eyes glued to Fed moves, US markets hit new heights, and Bitcoin rides a historic wave. Hold tight—the financial rollercoaster is far from over!

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Tags: Asian stocks, Federal reserve, Interest rate cuts, Us stock market, Tencent, Bitcoin,