China Stocks Join Asia Rally As Fed Hike Bets Ease | The China Show | 9/4/2026

Asian stocks and currencies experienced a rise on Friday (Sep 4) as investors reduced expectations of a US Federal Reserve interest rate hike in September. This led to a decrease in the value of the US dollar, which in turn strengthened the Japanese yen. The MSCI’s Asia-Pacific equities gauge climbed 0.6%, with the S&P 500 futures remaining relatively unchanged.

Japan's Topix fell 0.2%, Australia's S&P/ASX 200 was steady, Hong Kong's Hang Seng rose 2.2%, and the Shanghai Composite increased by 0.5%. Swaps indicated roughly equal chances of a quarter-point rate hike in September, down from about 70% earlier in the week. The US dollar steadied after dipping to its lowest level since May. Asian currencies reached levels last seen in October 2024.

Treasuries and gold retained their gains from the previous day. Attention remained focused on the yen, which strengthened by about 2% on Thursday, reversing a month of gradual decline. Traders increased bets on Bank of Japan (BOJ) rate hikes and remained cautious of potential further currency support from the central bank. Stocks and bonds benefited from Waller's comments, as yields surged globally to multi-decade highs due to rising oil prices and hawkish chair Kevin Warsh's outlook.

The comments were described as "very meaningful" by UBS global wealth management head CIO of Asia equity strategy, Suresh Tantia, as they could influence the direction of the Fed's next policy decision. Key factors to watch include the upcoming nonfarm payrolls data and the latest inflation figures, which may determine whether the Fed takes action during its upcoming meeting.

Brent crude oil rose towards $96 a barrel, marking a more than 7% gain over the past five sessions, driven by concerns about potential disruptions to energy flows stemming from renewed US-Iran tensions. Gold remained steady near $4,480 an ounce, while Bitcoin traded near $81,000. The two-year Treasury yield held at 4.34% after falling in the preceding session following the Fed governor's remarks.