Asia Markets Rise on Wall Street Rally as Investors Await U.S. Inflation Data

Updated At : 10:09 AM Aug 29, 2025 IST

Asian shares advanced on Friday, buoyed by a strong technology-led rally on Wall Street, as investors awaited key U.S. inflation figures later in the day for further clues on the Federal Reserve’s interest rate outlook.

Earlier this week, Nvidia’s (NVDA.O) earnings fell short of lofty investor expectations but still underscored robust spending on AI infrastructure. The results helped push the S&P 500 and Dow Jones Industrial Average to record highs overnight.

On Friday, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.4%. However, U.S. and European stock futures slipped, with Eurostoxx 50 futures down 0.2%, FTSE futures easing 0.08%, S&P 500 futures dipping 0.08%, and Nasdaq futures edging down 0.15%.

“Despite uncertainty around Nvidia’s prospects in China, the core revenue growth numbers don’t really suggest the broader AI story is faltering,” said Thomas Mathews, head of Asia-Pacific markets at Capital Economics. “Expectations are already sky-high. The bigger picture is that earnings growth among U.S. tech giants remains very strong, and unless that changes, the U.S. stock market is likely to hold up reasonably well.”

In China, the tech-heavy STAR 50 Index (.STAR50) fell 2.5% after a surge of more than 7% in the previous session. Shares of chipmaker Cambricon Technologies (688256.SS) dropped over 5% after the company issued a risk warning citing the sharp run-up in its stock since late July.

“When you see such a big move and then a company warning, it’s natural to suspect some overshooting,” said Frank Benzimra, head of Asia equity strategy at Société Générale. “But in my view, this is a normal market dynamic—we all know markets tend to climb faster than they fall.”

Elsewhere in Asia, the CSI300 blue-chip index (.CSI300) rose 0.7%, Hong Kong’s Hang Seng Index (.HSI) gained 0.5%, while Japan’s Nikkei (.N225) slipped 0.4%.

Focus on PCE Data

Broadly, market attention is now fixed on Friday’s release of the U.S. personal consumption expenditures (PCE) price index—the Fed’s preferred measure of inflation.

“The market will be watching closely for signs of whether some of the tariff pass-through is starting to filter into the PCE deflator,” said Khoon Goh, head of Asia research at ANZ. “There are three key data points before the September FOMC meeting: PCE, next week’s payrolls, and then the CPI reading.”

According to the CME FedWatch tool, traders are now pricing in an 86% chance of a Fed rate cut in September, up from 63% a month ago. Fed Governor Christopher Waller said Thursday he wanted to begin cutting rates next month and was “fully expecting” further reductions to bring policy closer to neutral.

The prospect of lower rates weighed on the dollar, which is down 2% this month against a basket of currencies. The euro slipped 0.2% to $1.1657, pressured partly by political and fiscal concerns in France, while sterling edged 0.08% lower to $1.3497, though it remains on track for a monthly gain of more than 2%.

The dollar also faced headwinds from concerns over Federal Reserve independence, as former President Donald Trump pressed his campaign to exert greater influence over monetary policy, including a fresh attempt to dismiss Fed Governor Lisa Cook. Cook filed a lawsuit Thursday, arguing Trump had no authority to remove her.

In commodities, oil prices retreated, with Brent crude futures down 0.68% at $68.15 per barrel and U.S. crude sliding 0.7% to $64.14. Spot gold fell 0.17% to $3,410.69 an ounce.