Asian equities rose Wednesday, with Japan’s Nikkei 225 surpassing 43,000 for the first time, as investors grew increasingly confident the Federal Reserve will cut interest rates in September. Wall Street’s record-setting rally extended into Asia, lifting the MSCI All-Country World Index to an all-time high. Cryptocurrency ether also surged to a near four-year peak, while European futures edged higher. The momentum follows Tuesday’s U.S. inflation data, which showed price pressures remain contained despite tariffs, reinforcing expectations of Fed easing.
The latest U.S. CPI report revealed a 2.7% annual increase in July, slightly below forecasts, easing concerns that President Trump’s tariffs would fuel runaway inflation. Meanwhile, Japan’s manufacturers grew more optimistic after a U.S. trade deal, and wholesale inflation slowed—supporting the Bank of Japan’s stance that cost-push pressures will fade. “Markets are pricing in a 94% chance of a September Fed cut,” said Paco Chow of Moomoo Australia, noting that investors are embracing risk assets despite stretched valuations.
Wall Street’s rally was further bolstered by Trump’s decision to delay new tariffs on Chinese goods for 90 days. However, his nomination of White House adviser Stephen Miran to the Fed board has raised concerns about political influence on monetary policy. Additionally, uncertainty persists over whether the Bureau of Labor Statistics will continue releasing monthly jobs reports after Trump’s pick to lead the agency, E.J. Antoni, suggested suspending them.
With the Fed and other major banks expected to stay accommodative, global equities could extend gains—but political and policy risks remain. Traders will watch for further economic data and Fed signals to confirm whether the current rally has staying power. For now, the path of least resistance appears upward as liquidity expectations override valuation concerns.