Asian markets climbed on September 4, 2026, after investors lowered bets on a Federal Reserve rate hike in September. The sentiment shifted following remarks from Fed Governor Christopher Waller and data showing U.S. inflation is cooling, while the Japanese yen saw its strongest daily rise in over a month.
Asian stocks moved higher on Friday, September 4, 2026, as investors grew more confident that the Federal Reserve might pause its period of interest rate increases. The MSCI Asia Pacific equities index gained 0.3%, with South Korea’s benchmark leading the regional rise. This optimism largely tracked a strong session on Wall Street.
Market sentiment shifted following comments from Federal Reserve Governor Christopher Waller. He indicated he would support holding interest rates steady if inflation continues to move toward the central bank’s 2% target. Market expectations for a quarter-point rate increase in September have dropped to roughly 50%, down significantly from the 70% probability priced in earlier in the week. The shift in outlook follows recent data showing the U.S. PCE price index—a key measure of inflation—cooled to 3.7% in July, compared to 4.1% in May.
The currency market also reacted to the changing outlook. The Japanese yen recorded its strongest daily performance in over a month, moving to near 155 per dollar. Meanwhile, the U.S. dollar weakened against a basket of currencies, hitting its lowest level since May. In energy markets, U.S. crude oil prices held steady at $91.85 a barrel, supported by ongoing concerns about global supply and geopolitical tensions.
While the market rally reflects growing optimism, the Federal Reserve remains data-dependent. This means officials could still raise rates if upcoming economic data shows that inflation is not cooling as expected. Investors are now turning their attention to the upcoming U.S. nonfarm payrolls report. Any signs of a tight labor market or strong wage growth could change the outlook for interest rates, making this data a key focus in the coming days.