The Asian stock market was on track for strong weekly gains on Friday, supported by growing expectations of near-term Federal Reserve rate cuts, which helped offset concerns over a U.S. government shutdown. Despite its impact, including the suspension of scientific research, financial oversight and delays in key economic releases such as Friday’s jobs report, investors have largely brushed off the disruption.
One factor behind the muted market response is that past government shutdowns have typically had little lasting effect on economic growth or market performance. Analysts noted that investors seem prepared to allow Washington time to resolve the standoff, though a prolonged shutdown could eventually weigh on sentiment and spark market volatility.
AI optimism lifts global markets
In the Asian stock market, MSCI’s Asia-Pacific index rose 0.39 percent on Friday, approaching the record high it reached on Thursday. The benchmark is on track for a weekly gain exceeding 2 percent and has climbed 23 percent year-to-date. With China and other parts of Asia observing an extended holiday, trading volumes in the region are expected to remain light.
Japan’s Nikkei rose 1.46 percent as of 5:05 GMT, nearing the record high it hit last month. Across Asia, markets were supported by Wall Street’s momentum, where all three major U.S. indexes closed at record highs, driven by strong gains in technology stocks that sustained investor enthusiasm for AI-related investments.
Nasdaq 100 futures were up 0.28 percent, while S&P 500 futures rose 0.23 percent. The Dow Jones Industrial Average was up 0.17 percent.
Taiwan’s tech-focused Taiwan Weighted Index rose 1.31 percent, while South Korea’s KOSPI surged 2.70 percent after chip giants Samsung and Hynix announced partnerships to supply OpenAI data centers earlier this week. However, Hong Kong’s Hang Seng was down 0.94 percent.
In the European stock market, the STOXX Europe 600 index gained 0.53 percent, while Germany’s DAX rose 1.28 percent.
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U.S. dollar set for 0.35 percent weekly decline as Japanese yen gains
With official labor market reports on hold, investors are relying on alternative data from public and private sources, which so far suggest a sluggish U.S. job market. The potential delay of key economic indicators poses a challenge for the data-dependent Federal Reserve, leaving it to lean on less comprehensive measures such as ADP employment figures and jobless claims.
This lack of clarity could trigger short-term market volatility and make it harder for investors to position themselves with confidence. Nevertheless, market sentiment increasingly reflects expectations that the Fed will continue on its rate-cutting path, with traders nearly fully pricing in a 25-basis-point reduction in October and a total of 114 basis points of easing by the end of 2026.
Due to the U.S. government shutdown, the U.S. dollar has come under pressure, with the dollar index, which tracks the greenback against six major currencies, holding steady but heading for a 0.35 percent weekly decline, its largest drop since early August.
Meanwhile, the Japanese yen has emerged as the main beneficiary of the dollar’s weakness, poised for a 1.5 percent weekly gain, its strongest since mid-May. The yen was last largely unchanged at 147.34 per U.S. dollar.
In commodities, Brent crude futures were up 35 cents or 0.55 percent to $64.46 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 34 cents or 0.56 percent to $60.82 per barrel. If the market fails to stage a stronger rebound, Brent is poised to settle at its lowest closing level since the week ending May 30, while WTI could finish at its weakest since May 2. On a weekly basis, Brent has dropped 8.3 percent, while WTI was down 7.6 percent.
Spot gold gained 0.04 percent to $3,846.3 as of 4:29 GMT, after hitting a new all-time high of $3,896.49 on Thursday. Bullion has risen 2.4 percent so far this week. Meanwhile, U.S. gold futures for December delivery dipped 0.02 percent to $3,867.30.
AloJapan.com