*

Stocks get lift from Fed easing expectations

*

Investors weigh 50bp cut, look to U.S. CPI, PPI releases

for

clues

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Political turmoil in many countries complicates outlook

for FX,

bond markets

By Rae Wee

SINGAPORE, Sept 9 (Reuters) - Asia stocks rose on

Tuesday, buoyed by expectations of a U.S. rate cut as early as

next week, even as political upheavals around the world kept

currency and bond investors on edge.

MSCI's broadest index of Asia-Pacific shares outside Japan

climbed 0.7%, taking its cue from Wall Street's

positive lead overnight that saw the Nasdaq index notch

a record-high close.

Nasdaq futures were last up 0.06%, while S&P 500

futures similarly ticked up 0.05%.

European futures, meanwhile, eased after regional benchmark

indexes clocked gains in the cash session on Monday.

EUROSTOXX 50 futures fell 0.2%, while FTSE futures

and DAX futures dipped 0.13% and 0.26%,

respectively.

Breathing new life into the equities rally were expectations

that the Federal Reserve would ease rates when it meets next

week, following Friday's weak U.S. jobs report.

While consumer and producer price inflation data are due in

the week ahead, investors are betting that a 25-basis-point cut

this month is a done deal, with focus now on whether the Fed

could deliver a larger 50bp move.

The U.S. Labor Department will also report a preliminary

revision estimate to the employment level for the 12 months

through March later in the day.

"Both publications are poised to influence the central

bank's pace down the monetary policy stairs," said Jose Torres,

senior economist at Interactive Brokers, referring to the PPI

and CPI figures.

"A heavy subtraction from the worker roster alongside a

downside miss on the CPI is likely to raise the odds of a

half-percent to a coin flip."

Markets are now pricing in an over 11% chance the Fed could

lower rates by 50bp this month, compared to zero a week ago,

according to the CME FedWatch tool.

Elsewhere, Japan's Nikkei climbed past the key

44,000 mark for the first time, aided by a weaker yen and

following the resignation of the country's Prime Minister

Shigeru Ishiba, a fiscal hawk.

U.S. tariffs on Japanese goods including cars and auto parts

are set to be lowered by September 16, Japan's tariff negotiator

Ryosei Akazawa said in an X post on Tuesday.

Hong Kong's Hang Seng Index rose 0.5%, while China's

CSI300 blue-chip index shed 0.7%.

POLITICAL TURMOIL

Renewed uncertainty over the political landscape across

various economies has rattled currency and bond markets in the

past few sessions.

From Ishiba's resignation in Japan, French lawmakers voting

to oust Prime Minister Francois Bayrou, a heavy election defeat

for Argentina President Javier Milei's ruling party in local

elections, to the abrupt replacement of Indonesia's finance

minister, investors had lots to consider.

Still, losses across currencies were capped by a broadly

weaker dollar, while most bond markets have since largely held

steady.

The yen was last 0.3% stronger at 147.05 per

dollar, clawing back its losses from the previous session, while

the euro steadied at $1.1772.

Yields on Japanese government bonds fell on Tuesday, after

rising in the previous session. Bond yields move inversely to

prices.

"While global political risks bear monitoring, the market is

currently positioned for a potential Fed rate cut, with equities

rallying and bond yields responding mainly to U.S. data

surprises," said Shier Lee Lim, lead FX and macro strategist for

APAC at Convera.

The two-year U.S. Treasury yield, which typically

reflects near-term rate expectations, languished near a

five-month low at 3.5005%.

The benchmark 10-year yield was similarly pinned

near a five-month trough and last stood at 4.0512%.

In commodities, oil prices gained on Tuesday after OPEC+

decided to increase production by less than what market

participants had anticipated.

Brent crude futures were up 0.73% at $66.50 per

barrel, while U.S. crude rose 0.72% to $62.71 a barrel.

Spot gold touched a fresh record high of $3,656.92 an

ounce, buoyed by expectations of imminent Fed cuts.