Asia's stock markets experience a surge due to rising inflation rates in the United States
Global Stock Markets Rise Amid Anticipation of Fed Rate Cut
In a day marked by economic anticipation, global stock markets experienced a surge on Tuesday. The Hang Seng Index in Hong Kong rose by 1.4 percent, closing at 25,234.90, while the Shanghai Composite in China saw a 0.5 percent increase, reaching 3,683.79. The FTSE 100 in London inched up 0.2 percent, ending the day at 9,147.81, and the New York-based Dow Jones Industrial Average also saw a 1.1 percent rise, closing at 44,458.61. The Nikkei 225 in Japan was up 1.5 percent, sitting at 43,359.03.
The boost in stock markets can be attributed to US data showing a tamer-than-feared impact on prices from President Donald Trump's tariff blitz. This positive sentiment was further bolstered by the expectation of a US Federal Reserve interest rate cut next month.
Fed Rate Cut Anticipation
Jerome Powell, the Chair of the Federal Reserve, is widely anticipated to announce a rate cut of around 0.25 percentage points at the Fed's September 16-17, 2025 meeting. This move is intended to support economic growth amid mixed inflation signals and a stable but softening labor market. Market expectations suggest more than an 80% chance of this cut, with some estimates even as high as 90%.
Powell's approach is cautiously data-dependent, signaling openness to easing but without a firm commitment. This balances the need to support economic growth and jobs with concerns about persistent inflation, particularly as tariffs inflate prices unevenly.
Impact on the US Economy
The expected rate cut could lead to lower borrowing costs, potentially stimulating consumer spending and investment, easing economic slowdown risks. The housing market and mortgage rates might also find some relief, as they have been pressured by earlier tightening. However, if executed carefully, the cut might balance inflation pressures, but risks remain if inflation proves more persistent due to tariffs or supply-side constraints.
Other Market Developments
In other news, the AI firm Perplexity made an offer of $34.5 billion for Google's Chrome web browser. Intel saw a 5.5 percent rise on Wall Street after CEO Lip-Bu Tan met with President Donald Trump. Oil prices edged lower after OPEC raised its demand forecast for 2026. Brent North Sea Crude is now down 0.2 percent at $66.01 per barrel, and West Texas Intermediate is down 0.2 percent at $63.02 per barrel. The dollar/yen exchange rate rose to 148.04 yen from 147.77 yen.
President Donald Trump also took to Truth Social to express his opinion, stating, "Jerome 'Too Late' Powell must NOW lower the rate." Despite this, the focus remains on Powell's public signals, especially his September speech at Jackson Hole and subsequent Fed communication, for clearer guidance on the timing and magnitude of future cuts.
In this context of anticipated economic changes, the expectation of a Fed rate cut is positively influencing the finance sector, as lower interest rates could stimulate business growth and technological advancements. The Chair of the Federal Reserve, Jerome Powell, is anticipated to announce a rate cut of around 0.25 percentage points at the Fed's meeting in September 2025, which is significantly impacting the stock market performances.
