A more supportive turn from the US Federal Reserve is shifting momentum in Asian markets. As softer US labour and consumer data continue to undercut the case for higher interest rates, investors are starting to reposition for the possibility of policy easing.
The reaction has been clearest in South Korea and Taiwan, where markets often move in lockstep with global capital flows. Both have seen a sharp rebound, driven by renewed optimism around global liquidity and the potential for lower borrowing costs. In Japan, the Nikkei is testing its highest levels since early summer, while stocks in Malaysia, Singapore and Indonesia are catching a lift from renewed foreign interest.
Behind the moves is a growing belief that the Federal Reserve may act sooner than expected. Several Fed officials have signalled increased caution, pointing to slower hiring, weakening consumer demand, and easing inflation pressures. Combined, these data points have led futures markets to begin pricing in a rate cut as early as March.
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