Japan’s Nikkei 225 surged 2.17%, reaching a record high by surpassing 51,000 for the first time on Wednesday. This increase was fueled by renewed optimism regarding U.S.-Japan trade relations and expectations of an additional rate cut by the Federal Reserve. The index concluded at 51,307.65. The increases followed the signing of a new rare earths framework on Tuesday by U.S. President Donald Trump and Japan’s Prime Minister Sanae Takaichi. Market participants exhibited increased confidence that the Federal Reserve would implement a consecutive 25 basis point reduction to bolster decelerating economic growth. Trump’s visit represented his inaugural meeting with Takaichi, who took office at the beginning of this month. He also engaged with Emperor Naruhito at the Imperial Palace.

Takaichi’s premiership is poised to steer the long-dominant Liberal Democratic Party towards a more economically liberal stance, while simultaneously embracing socially conservative and assertive security policies. Markets are reflecting almost complete certainty that the Federal Open Market Committee will implement an additional quarter-point reduction, following September’s cut, which would adjust the federal funds rate to a range of 3.75%-4.00%. “If [Fed chair Jerome Powell] adopts a dovish stance, expectations for future Fed cuts will likely rise, thereby enhancing market momentum,” Louis Navellier noted. The federal funds rate, established by the Federal Open Market Committee, represents the interest rate at which banks lend to one another for overnight loans. The actions of the Federal Reserve, while not directly impacting consumers, frequently exert influence over borrowing costs associated with mortgages, credit cards, and various other loans.

The Topix experienced a decline of 0.23%, concluding at 3,278.24. South Korea’s Kospi increased by 1.76% to conclude the trading day at 4,081.15, whereas the small-cap Kosdaq experienced a decline of 0.19%, finishing at 901.59. India’s Nifty 50 experienced an increase of 0.44%. Australia’s S&P/ASX 200 declined by 0.96%, closing at 8,926.2. According to the Australian Bureau of Statistics, consumer prices in Australia experienced a 3.2% increase in the third quarter, marking the most significant rise in over a year. The increase surpassed the 2.1% rise observed in the second quarter and exceeded the 3% forecast provided by economists surveyed by Reuters.

Mainland China’s CSI 300 experienced an increase of 1.19%, concluding at 4,747.84. The markets in Hong Kong are currently closed due to the holidays. In the U.S. overnight, all three major averages experienced an upward trajectory, closing higher. The S&P 500 experienced an increase of 0.23%, concluding the session at 6,890.89. Earlier in the day, it had exceeded the 6,900 level for the first time on an intraday basis. The Nasdaq Composite increased by 0.80%, concluding at 23,827.49, whereas the Dow Jones Industrial Average rose by 161.78 points, equivalent to 0.34%, to close at 47,706.37. The tech-heavy Nasdaq and the 30-stock Dow not only reached closing highs but also achieved new all-time intraday highs, in conjunction with the broader market represented by the S&P 500.