Asian stocks inch up as oil eases on truce talks

Asia opened the week on the front foot, with risk appetite supported by softer oil and expectations that the Federal Reserve will clarify a path to lower rates at Jackson Hole later this week. Japan and Taiwan extended record-setting runs, while broader Asia ex-Japan held near cycle highs. Oil, meanwhile, eased as immediate risks to Russian supply appeared to fade following the Trump-Putin meeting in Alaska, narrowing a key macro headwind for importers in the region. The combination—more confidence on rates, fewer commodity shocks—was enough to nudge equity futures in the US and Europe higher as Monday began.

The geopolitical layer matters, but not for the headline reasons. Washington’s apparent pivot toward exploring a comprehensive peace deal—rather than pressing for a ceasefire first—reduced near-term tail risk premia across energy and FX. This is not a resolution; it is a repricing of worst-case scenarios that had crept into oil curves and into risk-sensitive currencies. With further talks slated with President Zelensky and European leaders, markets are treating the Alaska optics as a de-escalation signal, not a settlement. That nuance explains why crude softened while equities in energy-importing Asia outperformed at the margin.

The policy fulcrum for the week is Jackson Hole. The Kansas City Fed’s symposium runs August 21–23, and Chair Jerome Powell is expected to frame how cooling inflation and a softer labor market interact with the Fed’s dual mandate. Investors already ascribe high odds to a September rate cut; derivatives pricing and recent survey work suggest markets have effectively “pre-announced” a 25-basis-point move, with debate focused on whether a second cut lands by December. What Powell says about balance—between employment risk and inflation persistence—will determine whether curves bull-steepen further or whether the long end continues to wrestle with term-premium and deficit concerns.

Earnings continue to underwrite equity resilience. S&P 500 profits rose double-digits year-on-year last quarter, and a majority of companies have raised full-year guidance, a pattern that legitimizes lofty multiples in the US benchmark indices. The market’s concentration risk is still a live discussion, but strength across the “big growth” cohort has diluted immediate fears of a sharp de-rating ahead of the next catalyst. With several large US retailers reporting this week, consumer-demand read-throughs will color whether the soft-landing narrative is broadening beyond tech’s cash generators. For now, futures near all-time highs indicate investors are comfortable paying for earnings visibility while the policy backdrop turns incrementally friendlier.

The dollar’s drift lower last week fits the same mosaic: easing US inflation pressure, rising confidence in a policy turn, and a modest chase into non-US risk. Even so, G10 dispersion remains notable. Rate-sensitive crosses could whipsaw around Powell’s tone if he emphasizes data-dependence over pre-commitment, particularly with August jobs and inflation prints still to come. In practical terms, that argues for corporate treasurers to keep hedging windows flexible through month-end and for portfolio managers to avoid tying risk budgets to a single Jackson Hole read. The signal investors want—“cuts are coming soon”—is almost certainly coming. The question is whether Powell frames the path as calibrated drift or as a readiness to accelerate if labor data cracks.

Regional strategy is evolving accordingly. In Japan, a weaker currency has amplified earnings leverage and kept the Nikkei’s momentum intact. In Taiwan and Korea, AI-linked supply chains continue to anchor index leadership while benefiting from a softer energy bill if crude stays contained. China’s equity bid is more fragile—near 10-month highs in blue chips reflect positioning and policy hopes as much as fundamentals—but a steadying external backdrop helps, particularly if dollar strength is capped. Europe remains the swing factor on the long end of global curves: higher defense spending and heavier issuance are pushing term premia higher, a reminder that “lower policy rates” does not guarantee “lower long yields,” especially where fiscal trajectories are in flux.

Oil’s slip is tactically supportive but not a macro cure-all. Prices around the mid-$60s on Brent relieve immediate import costs for Asia, and they also soften headline inflation impulses that could otherwise complicate central-bank messaging. Yet the path from here is hostage to geopolitics and compliance. If the Alaska channel produces a durable de-escalation, backwardation should ease further; if talks stall and pipeline or maritime risks resurface, today’s relief will look like a pause, not a trend. For now, the market is pricing fewer shocks rather than abundant supply, which is why equities cheered the move while energy names traded with less conviction.

The working assumption heading into the symposium is a Fed that sees risks “coming into balance,” to borrow the consensus phrasing. That would validate the market’s glide path without pre-committing to a September move in explicit terms. For operators and allocators, the playbook is straightforward: lean into regions and sectors where earnings quality intersects with policy tailwinds, and fund them against assets still priced for heavier risk premia that are now receding. The danger is not that Powell disappoints; it is that the market’s desire for precision meets a central bank that prizes optionality. In that gap, volatility can rise even as the destination—lower rates and more durable growth—becomes more plausible.

What this says about the market is simple. The rally is no longer riding exclusively on AI enthusiasm or on faith in cuts; it is being quietly diversified by better profits and a less threatening macro tape. If Jackson Hole confirms that shift without over-promising, the runway extends. If not, the leadership won’t flip overnight—but the price investors are willing to pay for that leadership will.