GLOBAL MARKETS-Asia shares jump as investors anticipate smaller interest rate rises

Author: Ankur Banerjee

SINGAPORE, Oct 27 (TASR) – Asian stocks rose on Thursday on growing expectations that major central banks could begin to slow the pace of interest rate hikes in the coming months, while a weaker dollar lifted commodities and cut Treasury yields.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.59% higher and poised for a third straight session of gains. The index fell by approximately 2% for the month.

Australia’s high-resource share index rose 0.81%, while Japan’s Nikkei opened 0.09% lower.

China’s stock market opened 0.1% higher on Friday, with Hong Kong’s Hang Seng index up 2.6% at the open.

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Chinese stocks have had a turbulent week, led by Monday’s brutal sell-off as global investors dumped Chinese assets on fears that President Xi Jinping’s new leadership team will prioritize ideology over economics.

But rising investor expectations that the Federal Reserve, along with other central banks, may halt their aggressive rate-raising policies helped calm investor jitters and dampened the dollar’s recovery.

“Yields are generally lower globally as earlier expectations for central bank tightening are still a bit lower,” said Taylor Nugent, market economist at National Australia Bank in Sydney.

Nugent also noted that the Bank of Canada announced a smaller-than-expected 50-percentage-point rate hike on Wednesday, and said it supported expectations that the Fed would begin a transition to similarly large rate hikes in December.

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U.S. Treasury yields fell, helped by a weaker dollar and expectations for the Fed to be less hawkish.

Meanwhile, Wednesday’s earnings report from Facebook parent Meta Platforms Inc and Samsung Electronics Co Ltd stoked downside fears after some of Europe’s biggest banks also warned of rising risks as the economy slumps.

In currency markets, the euro rose above $1 for the first time in five weeks and peaked at $1.00935 as investors awaited a decision from the European Central Bank (ECB), with markets expecting a 75bp rate hike. .

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Sterling traded at $1.1624, down 0.03% on the day, coming off a session high of $1.1645.

The yen strengthened against the dollar by 0.18% to 146.09 per dollar.

The dollar’s decline also helped push gold prices higher, with spot gold hitting a two-week high on Wednesday.

Oil prices continued to rise in early Asian trade on Thursday after rising more than 3% in the previous session.

Brent crude futures were up 25 cents, or 0.3%, at $95.94 a barrel by 0015 GMT. U.S. West Texas Intermediate (WTI) crude was up 19 cents, or 0.2%, at $88.10.

(Reporting by Ankur Banerjee; Editing by Simon Cameron-Moore)

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