Asia Stocks Surge as Markets Shake Off Recession Fears

Asian markets showed strong gains, with Japan's Nikkei poised for its best week in over four years, as positive economic data from the U.S. alleviated recession fears. This positive sentiment, coupled with steady U.S. Treasury yields and the dollar, boosted indices globally. Markets are now pricing in measured Fed rate cuts.

Asian shares rallied towards a weekly gain on Friday, with Japan's Nikkei on track for its best week in over four years. This positive surge stems from an optimistic risk sentiment spillover from Wall Street, while both the dollar and U.S. Treasury yields remained stable.

A series of U.S. economic data has played a crucial role in diminishing recession fears in the world's largest economy, leading investors to reconsider aggressive U.S. rate cuts. Jonas Goltermann, deputy chief markets economist at Capital Economics, noted that the market reaction to early August's weak U.S. data was exaggerated due to the rapid unwind of crowded positions.

MSCI's index of Asia-Pacific shares outside Japan rose 1.18%, setting the stage for a 2% weekly increase, as U.S. futures markets continued to post gains. This positive momentum was further fueled by robust U.S. retail sales and low jobless claims data, supporting the view of measured rate cuts by the Federal Reserve.

(With inputs from agencies.)