Taiwan and South Korea shares reached record highs, driving broader emerging Asian equities to a four-year peak, as markets expect the U.S. 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% 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 U.S. 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%, 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% to scale a record peak, led by a 2% rise in top contract chipmaker, TSMC , while South Korea's KOSPI index extended gains into its 11th consecutive session - its longest ever - 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% 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% each.
Singapore's FTSE Straits Times edged lower but remained anchored around its record levels, while its dollar firmed a touch to a near eight-week high.
Equities in the Philippines jumped over 1% while the peso ticked higher.
"ASEAN remains well placed for global monetary easing, though the scope and pace of such easing will vary across ASEAN depending on differing domestic conditions," said Kenneth Tang, senior portfolio manager at Amova Asset Management.
"We are most optimistic on Singapore, Indonesia and the Philippines."
Markets in Malaysia were closed for a public holiday.
HIGHLIGHTS:
** Yields on Indonesia's 10-year government bonds at 6.335%
** Japan's Nikkei and Topix notch fresh records
** Bank Indonesia, Taiwan's central bank to hold rates this week - Reuters poll
** US, China reach framework deal on TikTok; Trump and Xi to speak on Friday - Reuters
