Asian shares track Wall Street's rally after Powell hints at rate cuts

BANGKOK -- Asian shares advanced on Monday, tracking Wall Street’s rally after the head of the Federal Reserve hinted that cuts to interest rates may be on the way.

Fed chair Jerome Powell said Friday in a speech to an annual conference in Jackson Hole, Wyoming, that he's seen risks for the job market. A surprisingly weak report on job growth this month has led many traders to expect a rate cut as soon as the Fed's next meeting in September, after months of pressure from President Donald Trump for lower rates.

Lower interest rates make borrowing easier, helping to spur more investment and spending.

Hong Kong's Hang Seng index jumped 2.1% to 25,866.49, while the Shanghai Composite index surged 0.9% to 3,858.59. It's trading at its highest level in a decade, despite worries over higher tariffs on exports to the United States under Trump and weak domestic demand at home.

Taiwan's Taiex was up 2.5% as semiconductor maker TSMC Corp.'s shares advanced 3.1%.

Tokyo's Nikkei 225 gained 0.3% to 42,767.41, with computer chip-related companies leading gains.

The Kospi in South Korea climbed 1.1% to 3,204.48.

Australia's S&P/ASX 200 edged 0.2% higher, while the SET in Bangkok gained 1%.

“Asia is set to rally in catch-up mode, feeding off Wall Street’s Friday rebound after Powell cracked the door open to rate cuts,” Stephen Innes of SPI Asset Management said in a commentary.

This week, Nvidia's earnings report, due Wednesday after markets on Wall Street close, is a key focus of attention.

Nvidia's role as a key supplier of chips for artificial intelligence and its heavy weighting give it outsized influence as a bellwether for the broader market.

On Friday, the S&P 500 leaped 1.5% for its first gain in six days, closing at 6,466.91. That's just shy of its all-time high set last week.

The Dow Jones Industrial Average soared 846 points, or 1.9%, to its own record of 45,631.74. Nasdaq composite jumped 1.9% to 21,496.53.

Investors love lower interest rates, even if they risk adding to inflation.

Stocks of smaller companies led the way. They can benefit more from lower interest rates because of their need to borrow money to grow. The smaller stocks in the Russell 2000 index surged 3.9% for its best day since April.

Still, Powell did not commit to any kind of timing. He said the job market looks OK, even if “it is a curious kind of balance” where fewer new workers are chasing after fewer new jobs. Inflation, meanwhile, still has the potential to push higher.

The yield on the 10-year Treasury fell to 4.25% from 4.33% late Thursday. The two-year Treasury yield, which more closely tracks expectations for Fed action, sank to 3.69% from 3.79% in a notable move for the bond market.

Intel climbed 5.5% after Trump said the chip company has agreed to give the U.S. government a 10% stake in its business.

Nvidia rose 1.7% to trim its loss for the week. The company, whose chips are powering much of the world’s move in to artificial-intelligence technology, had seen its stock struggle recently amid criticism that it and other AI superstars shot too high, too fast and became too expensive.

In other dealings early Monday, U.S. benchmark crude oil gained 8 cents to $63.74 per barrel. Brent crude, the international standard, added 4 cents to $67.26 per barrel.

The U.S. dollar rose to 147.22 Japanese yen from 146.88 yen. The euro fell to $1.1707 from $1.1727.