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

By Ankur Banerjee

SINGAPORE, Oct 27 (Reuters) – Asian shares rose on Thursday on growing expectations that major central banks could begin to slow the pace of interest rate hikes in coming months, while the dollar’s retreat boosted commodities. and push the treasury yield lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.59% higher and set for a third straight session of gains. The index is down about 2% for the month.

Australia’s resource-heavy share index advanced 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.

China shares had a turbulent week, led by Monday’s brutal selloff as global investors dumped Chinese assets, worried that President Xi Jinping’s new leadership team would put ideology before the economy.

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But a heightened expectation among investors that the Federal Reserve and other central banks may block aggressive rate-hike policies helped calm investor jitters and blunted the dollar’s rally.

Taylor Nugent, a market economist at National Australia Bank in Sydney, said: “Yields are generally lower globally as the earlier run up in expectations for central bank tightening eases a little further.

Nugent also noted the Bank of Canada on Wednesday announced a smaller-than-expected rate hike of 50 percentage points, and said it favored expectations that the Fed would initiate changes to a similar rate hike in December.

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US Treasury yields fell, helped by a weaker dollar and expectations of the Fed becoming less hawkish.

Meanwhile, earnings reports from Facebook parent Meta Platforms Inc on Wednesday and Samsung Electronics Co Ltd fueled fears of a downturn after some of Europe’s biggest banks also warned of growing risks as the economy fizzles.

In currency markets, the euro pushed above $1 for the first time in five weeks, peaking at $1.00935, as investors awaited a rate decision from the European Central Bank (ECB), and markets expect it to yield a rate hike of 75 bp. .

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

The yen strengthened 0.18% against the greenback at 146.09 per dollar.

The slide in the dollar also helped push gold prices higher, with spot gold scaling a two-week high on Wednesday.

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

Brent crude futures rose 25 cents, or 0.3%, to $95.94 a barrel by 0015 GMT. US West Texas Intermediate (WTI) crude rose 19 cents, or 0.2%, to $88.10.

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

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