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Asian markets mostly rose Tuesday fuelled by optimism the Federal Reserve will slash interest rates this year, with gains led by a record high in Tokyo while gold also hit a fresh peak.
Last month's big miss on US jobs creation raised concerns about the strength of the world's top economy, but it has stoked bets that the central bank will loosen monetary policy, even as inflation remains stubbornly above its target.
Investors are awaiting the release of fresh data on prices this week to get a better idea about the Fed's next move, with Bloomberg reporting that expectations are for three quarter-point reductions before the end of the year.
Hopes for a move were boosted last month when Fed Chair Jerome Powell signalled a dovish pivot in a speech to an annual gathering of central bankers in Jackson Hole, Wyoming.
After a healthy day on Wall Street, where the Nasdaq chalked up another record, Asia started on a positive note.
Hong Kong climbed more than one percent, with Shanghai, Seoul, Taipei and Manila also up.
Sydney, Singapore and Wellington slipped.
Indonesian stocks and the rupiah fell more than one percent after President Prabowo Subianto removed Finance Minister Sri Mulyani Indrawati in a cabinet reshuffle following deadly anti-government protests across the country.
Gold hit a new high above $3,650.
But while the mood on trading floors is upbeat, IG markets analyst Fabien Yip offered a note of caution.
"Market participants have recently responded favourably to economic weakness under the 'bad news is good news' paradigm, as indicators of economic deceleration could prompt accelerated Fed rate cuts," she wrote in a commentary.
"However, following (Friday's) employment data release, investors are increasingly concerned that monetary policy easing may prove insufficient to address labour market deterioration."
Tokyo spiked at a new record as political upheaval in Japan was offset by hopes that whoever replaces Prime Minister Shigeru Ishiba will unveil a fresh round of economic stimulus.
"Investors are betting that the next leader from the ruling Liberal Democratic Party (LDP) could unleash a new wave of fiscal stimulus to bolster the economy," said Hani Abuagla, senior market analyst at XTB MENA.
"All eyes are on the upcoming LDP leadership race. The fiscal and monetary policy stances of the candidates will be critical in determining the future direction of both Japanese stocks and the yen."
Still, observers are keeping tabs on developments in the country after long-term yields on government bonds hit a record.
Also in view this week is a European Central bank policy decision as well as uncertainty in France after Prime Minister Francois Bayrou was ousted in a confidence vote, forcing President Emmanuel Macron to seek a replacement.
- Key figures at around 0230 GMT -
Tokyo - Nikkei 225: UP 0.2 percent at 43,732.80 (break)
Hong Kong - Hang Seng Index: UP 1.2 percent at 25,941.87
Shanghai - Composite: UP 0.1 percent at 3,830.42
Euro/dollar: UP at $1.1776 from $1.1760 on Monday
Pound/dollar: UP at $1.3570 from $1.3549
Dollar/yen: DOWN at 147.24 from 147.43 yen
Euro/pound: DOWN at 86.78 pence from 86.80 pence
West Texas Intermediate: UP 0.4 percent at $62.51 per barrel
Brent North Sea Crude: UP 0.4 percent at $66.31 per barrel
New York - Dow: UP 0.2 percent at 45,514.95 (close)
London - FTSE 100: UP 0.1 percent at 9,221.44 (close)
E.Choi--ThChM