Asian stocks advance ahead of Fed decision, Trump-Xi talks in focus

Asian shares climbed on Tuesday, extending Wall Street’s rally, as traders looked ahead to an expected US interest rate cut this week and closely watched the prospect of talks between US President Donald Trump and Chinese leader Xi Jinping.

The Federal Reserve is widely expected to trim rates at its policy meeting on Wednesday, though attention is turning to how far and how fast it will ease in the months ahead. Investors will also scrutinize the central bank’s updated “dot plot” forecasts and Chair Jerome Powell’s remarks, as signs of a weakening US labour market and stubborn inflation shape expectations.

“Jobless claims and unemployment are at their highest since 2021, and for the first time in four years, there are more job seekers than jobs,” said Stephen Innes of SPI Asset Management. “That single ratio tells the Fed all it needs to know: rate cuts are back on the runway. Add to that the housing drag—mortgage costs nearly doubled since pre-Covid, affordability at record lows, rents soaring—and you get a feedback loop hitting consumption, profits, hiring and confidence.”

The meeting comes with Trump ally Stephen Miran joining the Fed’s board of governors and the rate-setting Federal Open Market Committee after being confirmed by the Republican-led Senate. His appointment follows Trump’s repeated demands for lower borrowing costs and sharp criticism of Powell’s leadership.

In Asian trading, Tokyo rebounded after a holiday closure, while Hong Kong, Shanghai, Sydney, Taipei, Manila and Jakarta all posted gains. Seoul surged to another record, though Singapore and Wellington ended lower. The upbeat momentum tracked fresh highs on Wall Street, with the S&P 500 and Nasdaq both closing at records.

Meanwhile, expectations of extended US rate cuts have kept the dollar under pressure and pushed gold to a record high above $3,689 per ounce.

Adding to market optimism, Trump announced on his Truth Social platform that he will speak with Xi later this week, boosting hopes of easing tensions between Washington and Beijing. The two governments reached a framework agreement over TikTok during the latest round of trade talks in Madrid, with both sides saying a final deal is expected when the leaders connect on Friday.

Trump said on social media that negotiations were going “VERY WELL.”Tokyo - Nikkei 225: UP 0.3 percent at 44,904.13 (break)

Key figures at around 0230 GMT

Hong Kong - Hang Seng Index: UP 0.3 percent at 26,535.26
Shanghai - Composite: UP 0.1 percent at 3,866.00
Euro/dollar: UP at $1.1770 from $1.1768 on Monday
Pound/dollar: DOWN at $1.3604 from $1.3609
Dollar/yen: DOWN at 147.27 yen from 147.38 yen
Euro/pound: UP at 86.50 pence from 86.47 pence
West Texas Intermediate: UP 0.3 percent at $63.47 per barrel
Brent North Sea Crude: UP 0.3 percent at $67.65 per barrel
New York - Dow: UP 0.1 percent at 45,883.45 (close)
London - FTSE 100: DOWN 0.1 percent at 9,277.03 (close)