Traders greeted the first reduction in borrowing costs since 2020 by pushing the Dow and S&P 500 to record highs as they contemplated a soft landing for the world's top economy.

After a keenly awaited meeting, the US central bank decided to lower borrowing costs for the first time since the start of the pandemic by opting for a half-point reduction.

While the US central bank is widely expected to cut borrowing costs for the first time since the start of the pandemic, the big question is whether officials will go for a bumper move before a series of smaller ones into the new year.

Bets on the Federal Reserve slashing borrowing costs by as much as half a percentage point have jumped in recent days, with observers suggesting officials want to front-load an expected series of reductions.

The yen strengthened to less than 140 to the dollar for the first time since mid-2023 ahead of the Federal Reserve decision on Wednesday -- and a policy meeting at the Bank of Japan two days later -- while gold ticked up to a new record.

The Japanese unit was also boosted by bets on a Kamala Harris presidency after she was considered to have come out on top in her US presidential debate with Donald Trump and superstar Taylor Swift endorsed her.

The Federal Reserve is widely seen cutting rates at next week's meeting but debate surrounds whether it will be 25 or 50 basis points, with some arguing that going for the bigger option could suggest decision-makers are worried.

As a rollercoaster week drew to a close, debate centred on the Federal Reserve's plans for interest rates when it meets in less than a fortnight, with most observers expecting a 25-basis-point cut.

Equities endured on Wednesday the most tumultuous day since early August after a weak read on US factory activity combined with a collapse in tech firms to cause a rout across the board.

The sight of investors running to the hills sparked memories of the brief but tumultuous sell-off at the start of August that was partly fuelled by a big miss on US jobs creation.

The Federal Reserve is widely expected to cut interest rates at its next meeting this month but close attention is being paid to Friday's non-farm payrolls (NFP) figures, which are seen as playing a major role in how big the central bank will go.

With the much-hyped earnings report from bellwether chip titan Nvidia now in the rearview mirror, traders are once again able to concentrate on economic matters and the Federal Reserve's plans for interest rate cuts.

While the report beat expectations in many areas, it took the wind out of the sails for traders, who had been enjoying a run-up on the prospect of US interest rates coming down from next month.

While a Federal Reserve interest rate cut next month is baked into prices, traders are also keenly awaiting next week's crucial non-farm payrolls figures, which are seen as key to determining how big the central bank goes.

A string of supportive data in recent weeks and comments from top Federal Reserve officials have helped push equities higher in August after starting the month in turmoil on fears of a US recession.

Traders were also keeping an eye on developments in the Middle East after a flare-up in hostilities between Israel and Hezbollah that fanned fears of an escalation in the region.

The yen also advanced after the head of Japan's central bank told lawmakers that officials could hike interest rates again if the economy and inflation perform as expected, weeks after a surprise increase caused turmoil on markets.

Tokyo, Hong Kong, Sydney, Singapore, Seoul, Mumbai, Bangkok and Manila rose Thursday, though Shanghai, Wellington, Jakarta and Taipei slipped.

With few sparks to drive buying, markets took their cue from Wall Street, where the main indexes slipped after an eight-day advance, with focus on a speech Friday by central bank boss Jerome Powell at the Jackson Hole symposium in Wyoming.

Investors appear to have gotten over the turmoil that beset trading floors this month as a string of data suggested that worries of a US recession had been overdone.

The dollar rose more than one percent against the yen after the retail sales report was released.

After a painful collapse fuelled by a big miss on US jobs creation, equities managed to bounce back over the following days and ended Friday on a healthy note.

Equities across the planet have seen big fluctuations since a closely watched gauge of the US labour market came in well below forecasts and fanned fears the Federal Reserve may have waited too long to cut interest rates.

Tokyo, Sydney, Seoul, Wellington, Mumbai, Taipei and Jakarta were in the red, along with London, Paris and Frankfurt.

After Monday's collapse that saw trillions of dollars wiped off valuations globally, traders returned to pick up bargains on Tuesday, with Japan's Nikkei bouncing back from a 12.4 percent loss to enjoy a gain of more than 10 percent.

Tokyo, which suffered a record loss Monday, led the gains, soaring more than 10 percent as traders bought beaten-down stocks caught up in a catastrophic day for markets.

A much-anticipated report Friday showed the US economy added just 114,000 jobs last month, well down from June and far fewer than expected, while the jobless rate rose to the highest level since October 2021.

US chip titan Intel became the latest bearer of bad news, warning it would slash more than 15 percent of its workforce -- about 18,000 jobs -- as it streamlines operations.

Investors are steeling themselves for more reports this week from other titans, including Microsoft, Facebook-parent Meta, Apple and Amazon.

The upbeat mood comes at the start of a busy week for traders, with the central banks of the United States and Japan making policy decisions, a key US jobs report due on Friday and megacaps releasing their earnings.