Asian equities advanced Monday as investors positioned for a potentially transformative week in U.S. monetary policy, while oil prices softened amid easing concerns over Russian supply disruptions. Regional benchmarks saw notable gains, with Japan’s Nikkei 225 climbing 0.9% to a fresh record and Chinese blue chips hitting 10-month highs after rallying 1.3%. The risk-on sentiment followed last week’s four-year peak for MSCI’s Asia-Pacific ex-Japan index, with Taiwan’s market also reaching unprecedented levels.
The market focus now shifts to the Federal Reserve’s Jackson Hole symposium (August 21-23), where Chair Jerome Powell is expected to outline the central bank’s policy trajectory. Analysts anticipate Powell will signal improving balance between employment and inflation goals—paving the way for rate normalization—while avoiding explicit commitment to a September cut. “Markets have fully priced a 25bps cut next month, but Powell will likely await August data before telegraphing moves,” noted Citi’s Andrew Hollenhorst. Futures currently imply an 85% chance of a September easing, with another expected by year-end.
Geopolitical developments added to the cautious optimism, as President Trump prepares to host Ukraine’s Zelenskiy and European leaders following his Alaska summit with Putin. The apparent alignment between Washington and Moscow on pursuing comprehensive peace talks—rather than an immediate ceasefire—reduced immediate energy supply fears, with Brent crude dipping 0.3% to $83.15/barrel. European futures pointed to modest openings, with Eurostoxx 50 and DAX contracts up 0.2%.
The dual catalysts of impending Fed guidance and evolving Ukraine diplomacy are testing markets’ risk appetite. While tech-heavy Asian markets benefited from the dovish rate outlook, commodities faced headwinds from reduced geopolitical premiums. As traders await concrete signals from Jackson Hole, the week’s trajectory may hinge on whether Powell validates market expectations for imminent policy easing.
