Market watch: Asian stocks rally on Fed cut hopes; oil prices dip on demand concerns

Asian stock markets climbed strongly on Friday, extending a rally that has lifted Wall Street to fresh records, as investors grew confident the US Federal Reserve will deliver an interest rate cut next week. At the same time, oil prices slipped amid signs of softer demand and rising global supply.The buoyant mood in equities has been fuelled by recent US inflation and employment figures, which investors say have cleared the path for the central bank to ease policy. According to news agency AFP, jobless claims in the United States hit a four-year high last week, while August payrolls data showed just 22,000 jobs were added. Revised numbers also indicated employment growth in the year through March was more than 900,000 lower than earlier estimated.Inflation, meanwhile, held steady at around 3 per cent. Prices in August rose slightly faster than in July but were broadly in line with expectations, easing fears that US President Donald Trump’s tariffs would trigger a sharp spike. Taylor Nugent, senior economist for markets at National Australia Bank, was quoted as saying by AFP, “Inflation is not getting closer to the Fed’s target, but… as labour market concerns grow more pressing, fears (that) price pressures will be persistent fade. There is nothing to stand in the way of Fed cuts this year.”Traders are now almost certain the Fed will reduce borrowing costs by 25 basis points, though some speculate on a larger move. As per AFP, Chris Weston of Pepperstone said, “The base case is a 25-basis-point cut backed by a commitment to ease further in the meetings ahead,” while cautioning that a 50-point reduction remains unlikely.Reflecting the optimism, Hong Kong’s Hang Seng Index surged about 1.5 per cent, powered by nearly seven per cent gains in Alibaba after the e-commerce giant boosted its AI investment plans and pledged more spending on its core business. Tokyo’s Nikkei 225 rose 0.7 per cent to 44,694.65, while markets in Seoul, Shanghai, Sydney, Singapore, Taipei and Manila also advanced, AFP noted.In contrast, oil prices edged lower, extending heavy losses from the previous session. Brent crude fell 30 cents, or 0.45 per cent, to $66.07 a barrel, while US benchmark West Texas Intermediate slipped 31 cents, or 0.5 per cent, to $62.06, news agency Reuters reported. Both contracts had already shed between 1.7 and 2 per cent on Thursday.The downturn followed the International Energy Agency’s projection that global supply will grow faster than expected this year, owing to planned output hikes by OPEC and its allies. OPEC, however, left its 2025 and 2026 demand forecasts unchanged, citing resilient economic growth.As per Reuters, Saudi Arabia’s exports to China are set to climb to 1.65 million barrels per day in October, up sharply from September’s 1.43 million bpd, as Riyadh seeks to regain market share. Meanwhile, Russia plans to scale back ESPO Blend shipments from Kozmino port next month.Analysts said the mix of Fed-driven optimism and energy-market caution highlights the balancing act facing investors heading into the central bank’s policy meeting next week.