Asian Stocks Rise as Rate Cut Bets Grow; Japan Surges Despite PM Ishiba’s Resignation

Asian stocks advanced on Monday, supported by growing expectations of a U.S. Federal Reserve interest rate cut in September, after softer-than-expected U.S. payrolls data fueled hopes for looser monetary policy. S&P 500 futures edged up 0.2% in Asian trade, rebounding after Wall Street’s Friday losses as investors weighed the risks of slowing U.S. growth against potential rate cuts.

Japan led regional gains, with the Nikkei 225 jumping 1.5% and the TOPIX up 1.1%, nearing record highs. Revised GDP data showed the Japanese economy expanded faster than initially estimated, driven by strong exports and consumer spending. Optimism also grew that the Bank of Japan may pause further rate hikes. The rally came despite political uncertainty after Prime Minister Shigeru Ishiba unexpectedly announced his resignation following a heavy defeat for the ruling coalition in recent upper house elections. Ishiba’s exit, shortly after securing a U.S. trade deal that reduced tariffs on Japanese goods, opens the door to a potential leadership battle within the Liberal Democratic Party. His likely successors are seen as less fiscally conservative, adding to market speculation.

Elsewhere in Asia, gains were modest. China’s CSI 300 slipped 0.2% as investors booked profits, while the Shanghai Composite and Hong Kong’s Hang Seng rose 0.1% each. Markets are awaiting key Chinese trade and inflation data for further direction. Australia’s ASX 200 underperformed on growth concerns, particularly in mining and banking sectors. South Korea’s KOSPI and Singapore’s Straits Times each added 0.1%. Futures for India’s Nifty 50 rose 0.3% but remained pressured after Washington imposed steep 50% tariffs on Indian goods.

Overall, optimism over Fed rate cuts buoyed sentiment, but uncertainty around U.S. economic strength and Japan’s political transition kept broader Asian market gains limited.