Asian stocks traded within narrow ranges on Friday as the financial world turned its attention to the Jackson Hole symposium, where Federal Reserve Chair Jerome Powell is set to deliver a key speech. Investors are eagerly awaiting clues on the potential for a September interest rate cut, following recent economic data that pointed to softening in the U.S. job market. This cautious mood was reflected in the MSCI’s broadest index of Asia-Pacific shares outside Japan, which pared early gains to trade slightly lower.
Defying the region’s overall tentative mood, Chinese markets rallied strongly. The blue-chip CSI 300 Index jumped 1.8%, led by a surge in technology shares. This advance was fueled by two key developments: the release of an upgraded AI model by DeepSeek and a Reuters report that Nvidia had asked Foxconn to suspend work on an AI chip, which provided a boost to shares of its Chinese competitors. The tech-focused STAR 50 index soared nearly 8%.
Meanwhile, the Japanese yen was poised for a weekly decline despite data showing core consumer inflation remained above the Bank of Japan’s target, sustaining expectations for a future rate hike. The U.S. dollar index advanced as traders digested comments from Fed officials who appeared cautious about an imminent rate cut. This sentiment was mirrored in U.S. futures, which pointed to a lower open following a five-day losing streak on Wall Street.
Market expectations for a September cut have fluctuated, currently pricing in a 73.3% probability, down from earlier in the week. The prevailing view among analysts is that Powell is unlikely to provide definitive guidance ahead of critical upcoming data on jobs and inflation. This creates a risk for markets that are heavily betting on easing, as any hesitation from Powell could strengthen the U.S. dollar and challenge current market pricing.
