BENGALURU: Taiwan and South Korea shares reached record highs, driving broader emerging Asian equities to a four-year peak, as markets expect the US Federal Reserve will resume its easing cycle this week and signal potential for further rate cuts.
The MSCI Asia EM equities index jumped 0.8 percent to its highest since July 2021, while a gauge tracking stocks in ASEAN countries, dominated by Singapore, Malaysia, and Indonesia, hovered around its early 2020 levels.
Emerging Asian currencies firmed against the US dollar: Taiwan’s dollar appreciated the most in six weeks, while Indonesia’s rupiah touched a one-week high. South Korea’s won also edged up to snap a four-day losing streak.
Brazil’s real held steady during Asia hours after hitting a 15-month high overnight, ahead of a central bank policy meeting where it is expected to keep its key rate unchanged at a steep 15 percent, a Reuters poll showed.
Global stock markets have been buoyant over the past few sessions as investors scoop up risk assets ahead of the expected Fed rate cut. Investors will be paying close attention to the central bank’s language on the economic outlook and inflation, for clues on its next steps.
“Fed fund futures have priced a 25 bps cut for many weeks, but what will matter for the USD is how the FOMC views the balance between growth, in particular the employment situation, against inflation,” said Paul Mackel, global head of FX research at HSBC.
Futures have already begun factoring in 127 bps worth of cuts by July 2026.
“It will be hard to ‘out-dove’ this market pricing at this FOMC meeting, and hence the risk of a USD squeeze higher exists. Yet, we would expect such a USD positive reaction to be temporary,” Mackel said.
Taiwan’s benchmark gauge advanced 1 percent to scale a record peak, led by a 2 percent rise in top contract chipmaker, TSMC , while South Korea’s KOSPI index extended gains into its 11th consecutive session - its longest since September 2019 - to a fresh lifetime high.
“Eased tariff uncertainties and robust AI demand have led to a swift recovery in (Taiwan’s) equity market,” Citi analysts wrote in a client note.
In Southeast Asia, Indonesia’s shares rose 0.6 percent at the open but surrendered those gains to trade slightly lower. Its currency, the rupiah firmed a touch to 16,360 per dollar, its best in a week.
Stocks in Thailand extended gains into their eighth straight session to touch their best point in seven months, driven by Delta Electronics Thailand and Airports of Thailand, which rose more than 2 percent each.