U.S. and European stock markets rose as Asian shares fell on Thursday amid increased bets that the Federal Reserve will resume cutting interest rates next month. Hopes for rate easing put the U.S. dollar under pressure and helped push Bitcoin to a record high as the global stock rally paused briefly.
MSCI’s broadest index of Asia-Pacific shares outside Japan hovered near its highest level since September 2021 but was down 0.17 percent as of 6:36  GMT.
Meanwhile, Wall Street’s S&P 500 and Nasdaq closed at record highs for the second consecutive day. The S&P 500 was trading 0.32 percent higher at 6,466.58, while the Nasdaq rose 0.14 percent to 21,713.14.
U.S. dollar drops to two-week low
The MSCI All Country World Index rose to a record high for the second straight session on Wednesday and was down 0.07 percent on Thursday.
The U.S. dollar dropped to a two-week low against a basket of major currencies amid changing expectations for Federal Reserve rate cuts, with remarks from Treasury Secretary Scott Bessent fueling speculation of a potentially larger 50-basis-point reduction. Goldman Sachs projects that the Fed will implement three 25-basis-point cuts in 2025, followed by two additional cuts in 2026.
Traders are now almost fully pricing in a rate cut for September, with the likelihood of a more aggressive 50-basis-point reduction climbing to 7 percent from 0 percent just a week ago, according to CME’s FedWatch tool.
Japanese yen rises to three-week high
In the Asian stock market, the Nikkei futures fell 1.44 percent, while South Korea’s KOSPI index was up 0.030 percent. In addition, China’s CSI 300 Index gained 0.27 percent.
In the European stock market, the EUROSTOXX 50 added 0.98 percent, while FTSE futures rose 0.03 percent and DAX futures fell 0.08 percent.
During Asian trading hours, the Japanese yen was the biggest mover, rising to a three-week high of 146.38 per dollar after Bessent said in an interview that the Bank of Japan is likely to raise interest rates, citing that it is behind the curve in addressing inflation risks. The yen also rose broadly against the euro and British pound.
Bank of Japan Governor Kazuo Ueda has indicated a willingness to continue raising interest rates but signaled a cautious approach, noting that underlying inflation, which emphasizes domestic demand and wages, still falls short of the central bank’s target. The BOJ has also been hesitant to hike rates until there is greater clarity on how U.S. trade tariffs might affect Japan’s economy and corporate profits.
Read: Bitcoin hits new high of $124,002.49 on Fed rate cut bets, U.S. reforms
Bitcoin hits all-time high
Amid the major rally in the U.S. stock market, optimism over potential monetary policy easing helped push Bitcoin to an all-time high, with analysts citing recent financial sector reforms as an additional tailwind. So far in 2025, Bitcoin has surged 32 percent, while the second-largest cryptocurrency, Ether, has gained 41 percent and is trading just below its November 2021 record high.
In commodities, gold edged higher and crude oil prices rose slightly after hitting two-month lows on Wednesday, as investors remained focused on the upcoming meeting between U.S. President Donald Trump and Russian President Vladimir Putin on Friday.
