Asian shares achieved their highest point in over three years on Friday, riding on the wave of a rally on Wall Street. However, the U.S. dollar came under pressure due to concerns regarding the Federal Reserve’s independence and the possibility of early interest rate cuts. Global stock indices appeared set to close the week positively, with previous worries about Middle Eastern tensions and trade uncertainties taking a backseat.
The MSCI index for Asia-Pacific shares outside Japan reached its highest level since November 2021. Additionally, the global stock gauge marked another record high for the fourth consecutive session. Futures for the EUROSTOXX 50 and DAX were both up by more than 0.5%, although FTSE futures remained relatively stable.
The S&P 500 and Nasdaq futures both gained 0.1%. Positive developments fueling this optimistic sentiment included news of an agreement between Washington and Beijing regarding expedited rare earth shipments to the U.S. U.S. Treasury Secretary Scott Bessent announced an appeal to Republicans in Congress to eliminate the Section 899 retaliatory tax proposal, which had made some foreign investors uneasy. Khoon Goh, head of Asia research at ANZ, suggested that these collective developments contributed significantly to the buoyant market.
In Japan, the Nikkei index surged by 1.4%, surpassing the 40,000 mark for the first time in five months. Meanwhile, stocks in Hong Kong and mainland China saw slight declines, although the CSI 300 index was on track for a notable weekly gain. Market focus has shifted towards potential changes in leadership at the Federal Reserve after reports suggested U.S. President Donald Trump might consider replacing Chair Jerome Powell soon.
This speculation weighed heavily on the already weakened dollar, pushing it close to a 3.5-year low and marking a significant weekly loss. In the commodities space, oil prices were poised for a downturn amid easing concerns over Middle Eastern supply risks. Brent crude futures increased slightly, but both Brent and U.S. crude were heading for a drop exceeding 10% for the week.
Meanwhile, spot gold experienced a decline of 1%.