Asian Stocks Rise as Fed Hike Bets Ease

By Ronnie Harui

Asian equities rose Friday morning as markets dialed down expectations for an interest-rate hike after dovish remarks from a Fed official. The yen strengthened against most other currencies on growing prospects of aggressive monetary-policy tightening by the Bank of Japan.

Federal Reserve governor Christopher Waller on Thursday laid out a case for why cooling U.S. inflation could compel him to keep interest rates steady at the Federal Open Market Committee's meeting later this month.

Waller said that while U.S. inflation is still "meaningfully" above the Fed's 2% target, he's seeing signs of cooling in recent data. He also said the August inflation data will guide his decision on whether to raise or leave rates unchanged at the upcoming meeting.

"The main theme was risk on," Commerzbank Research analysts said in a note. "This followed a pullback in Fed rate-hike expectations after Fed Governor Waller signaled he could support holding rates steady at the next FOMC meeting in September," they added.

South Korea's Kospi rose 1.3%, Japan's Nikkei Stock Average advanced 0.9% and Australia's S&P/ASX 200 benchmark index added 0.2%.

Japan's currency appreciated against the dollar and most other currencies on Friday. The dollar edged 0.1% lower to 155.63 yen after briefly touching 155.27 yen earlier, the lowest intraday level since Aug. 3, LSEG data showed. The Australian dollar declined 0.3% to 112.10 yen, while the euro was flat at 181.06 yen.

"The yen was the clear outperformer," said Rodrigo Catril, senior FX strategist at National Australia Bank, in commentary. The move reflected factors including hawkish comments from BOJ policy board member Hajime Takata and U.S. Treasury Secretary Scott Bessent's public support for policies consistent with a stronger yen, Catril said.

Overnight index swaps in Japan have shifted to fully price in a 25-basis-point rate increase by the BOJ at this month's meeting, and even "flirting with the idea" of a larger than 25-basis-point rate hike, Catril said.

"Our sense is that there is a genuine repricing going on, principally fueled by what seems to be a united effort by both the U.S. and Japan seeking to strengthen JPY," Catril added.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

September 03, 2026 21:43 ET (01:43 GMT)