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August 5, 2025 – 03:57

(Bloomberg) — Asian stocks advanced on renewed risk appetite, as a wave of dip buying combined with growing bets on potential interest-rate cuts lifted investor sentiment.

The MSCI Asia Pacific Index rose 0.7%, as South Korean shares jumped 1.4%. Oil steadied after a three-day drop as investors weighed risks to Russian supplies, with US President Donald Trump stepping up his threat to penalize India for buying Moscow’s crude. Treasuries and a gauge of the dollar were little changed while gold advanced 0.2%.

On Monday, the S&P 500 posted its biggest rally since May as traders started to price in rate cuts by the Federal Reserve, following the weaker-than-expected jobs data. Equities have rebounded sharply from their April lows, driven by growing investor optimism that corporate America can absorb the impact of the recent wave of tariffs and the US economy will be able to avoid a recession.

“It looks like today everyone is following the upward trend in US stocks,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “It’s a bumpy road, and investors are still mindful of the possibility of a recession. But signs of growth, particularly in US tech stocks, are helping sentiment.”

After the jobs data on Friday, the markets were implying a roughly 80% chance of a rate cut at the next Fed meeting. Following last night’s trade, those odds have increased to nearly 95%, wrote Kyle Rodda, a senior market analyst at Capital.com in Melbourne.

Tech megacaps led gains Monday, rebounding from recent selling pressure, with Nvidia Corp. and Meta Platforms Inc. each surging at least 3.5%.

S&P 500 earnings are crushing second-quarter expectations — up 9.1%, triple the pre-season forecast and the strongest beat rate since 2021, according to data compiled by Bloomberg Intelligence.

Monday’s jump in stocks prompted a comment from Trump, who said it was a “Good day in the Stock Market” and there will be many more days like this.

“America is very rich again, and stronger than ever before,” Trump wrote on his Truth Social platform Monday.

Still, a chorus of stock market prognosticators at some of Wall Street’s biggest firms are warning clients to prepare for a pullback as sky-high equity valuations slam into souring economic data.

On Monday, Morgan Stanley, Deutsche Bank AG and Evercore ISI all cautioned that the S&P 500 Index is due for a near-term drop in the weeks and months ahead. The predictions come after a furious rally from April’s lows that propelled the gauge to levels it has never seen before.

Separately, Fed San Francisco President Mary Daly said the time is nearing for rate cuts given mounting evidence that the job market is softening and there are no signs of persistent tariff-driven inflation, Reuters reported.

“I was willing to wait another cycle, but I can’t wait forever,” Daly said of the Fed’s decision last week.

In Asia, investors will also be focused on an auction of 10-year Japanese government bonds later Tuesday. Some market participants expect the sale to be weak following the recent decline in yields.

On the tariff front, the European Union is expecting Trump to announce executive actions this week to formalize the bloc’s lower levies for cars and grant exemptions from levies for some industrial goods such as aviation parts, according to people familiar with the matter. Meanwhile, the Swiss government said it is determined to win over Washington after last week’s shock announcement of 39% levies on exports to America.

“Our base case remains that US tariffs will eventually settle around 15%. While this would be the highest since the 1930s, and six times higher than when Trump returned to office, we do not expect it to cause a recession or end the equity bull market,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

Corporate News:

Palantir Technologies Inc. reported a 48% increase in revenue for the second quarter to more than $1 billion, citing the “astonishing impact” of artificial intelligence technology on its business. Tesla Inc. approved an interim stock award worth about $30 billion for Chief Executive Officer Elon Musk, a massive payout meant to keep the billionaire’s attention on the automaker as a legal fight over a 2018 pay package drags on. Meanwhile, shipments from Tesla Inc.’s Shanghai factory slipped back into decline on intense competition in China and global trade uncertainties. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 10:47 a.m. Tokyo time Japan’s Topix rose 0.6% Australia’s S&P/ASX 200 rose 1.1% Hong Kong’s Hang Seng rose 0.1% The Shanghai Composite rose 0.4% Euro Stoxx 50 futures rose 0.1% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1572 The Japanese yen was little changed at 146.96 per dollar The offshore yuan was little changed at 7.1778 per dollar Cryptocurrencies

Bitcoin was little changed at $114,849.2 Ether fell 0.3% to $3,691.1 Bonds

The yield on 10-year Treasuries was unchanged at 4.19% Japan’s 10-year yield declined 2.5 basis points to 1.475% Australia’s 10-year yield declined 11 basis points to 4.21% Commodities

West Texas Intermediate crude was little changed Spot gold rose 0.2% to $3,380.71 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Alice French and Jason Scott.

©2025 Bloomberg L.P.