Asian shares traded with caution on Thursday , mirroring Wall Street’s overnight softness. Markets across the region hovered in narrow bands as investors awaited a deluge of U.S. economic data that may clarify the Federal Reserve’s next moves. Japan’s Nikkei rose modestly, while China’s major indices edged up. Hong Kong, Australia, and other markets showed mixed performance.

The Asian rally seemed to take a breather, particularly amid month-end rebalancing flows, as many indexes had already run up over recent weeks.

U.S. Futures Advance on AI & Earnings Optimism

In Asia hours, U.S. stock futures nudged higher, reflecting optimism over a rebound in technology stocks and strong performance in key earnings reports. Contracts for the S&P 500 and Nasdaq 100 rose roughly 0.2%, suggesting the rally could resume following Wall Street’s brief pullback.

Micron, among other chipmakers, posted solid results, helping lift sentiment in semiconductor and tech sectors.

Dollar Holds Strength as Rate Cut Odds Wobble

The U.S. dollar maintained gains on 25 September, shrugging off expectations of aggressive rate cuts until markets get clearer data. The dollar index hovered near 97.8, supported by persistent inflation concerns and cautious Fed messaging.

Traders see around 43 basis points of easing priced in for the rest of the year, but uncertainty over the timing and magnitude of cuts continues to sway sentiment.

What’s Driving the Moves

The renewed strength in U.S. futures comes as the AI narrative remains a backbone of growth expectations, especially with large tech companies doubling down on investments.

However, valuation risks and stretched multiples continue to concern some investors. With major indexes hitting highs earlier this week, the pullback is seen by some as a healthy reset rather than a reversal.

Markets are now bracing for a slew of U.S. data: weekly jobless claims, the final Q2 GDP reading, and the Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation metric. These reports could strongly influence expectations around further rate cuts.

Outlook & What to Watch

The near-term tone remains cautious but slightly tilted bullish for U.S. markets. A strong earnings round or upbeat inflation read could fuel a fresh leg higher. But weak data might reinforce fears about a slower growth backdrop and delay further rate cuts.

Traders should pay attention to:

• The PCE inflation report
• GDP and jobs data surprises
• Fed speak (Powell, regional presidents)
• Reactions in interest rates and tech sector behavior

If U.S. futures maintain gains, Asia might follow, but slipping data or hawkish surprises could quickly reintroduce volatility.