Asian stocks bounce higher on signs rate hikes are working




  • In Business
  • 2022-10-05 01:46:04Z
  • By Reuters

By Scott Murdoch

HONG KONG (Reuters) - Asian stocks rose on Wednesday as investors grew hopeful future global interest rate rises might become less aggressive amid early signs previous policy tightening was working to temper price pressures in some major world economies.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5%, after U.S. stocks ended the previous session with gains. The index is down 0.6% so far this month.

Australian shares were up 1.35% in early trade, while Japan's Nikkei stock index climbed 0.34%.

Hong Kong's Hang Seng Index gained 3.76% a day after its public holiday while mainland Chinese markets remain closed for holidays.

The strong start for Australian shares is the first two-day gain since Sept. 13 and follows the sharemarket's best day in more than two years on Tuesday after the Reserve Bank of Australia ordered a smaller-than-expected 25 basis points interest rate rise.

On Wall Street, the Dow Jones and S&P 500 indexes staged their biggest two-day rallies in two years as fears of aggressive rate hikes eased.

The positive sentiment was fuelled after U.S. job openings fell by the most in nearly 2-1/2 years in August in a sign the Federal Reserve's mission to tame demand by hiking rates was working.

"Markets (have) clawed back more of the ground they lost in a slippery several weeks on Wall Street, amid hopes the Federal Reserve would moderate its aggressive approach to its plans for interest rate increases after data was released showing a drop in job openings in the country," Ord Minnett research analyst wrote in a client note on Wednesday.

However, in a sign some central banks are still anxious about inflation, New Zealand raised its rates 50 basis points on Wednesday, as expected, but said it had considered a 75-basis point increase.

The Dow Jones Industrial Average rose 2.8%, the S&P 500 gained 3.06% and the Nasdaq Composite added 3.34%.

The S&P 500 has recorded its third-best start to an October since 1930, according to Macquarie analysts.

"Global financial markets have staged a sharp recovery buoyed by expectations that central banks may follow the RBA's lead and ease the pace at which they tighten monetary policy," ANZ analysts said.

"Views are mixed as to whether markets have now bottomed out or whether this recovery will be short-lived."

The yield on benchmark 10-year Treasury notes rose to 3.625% compared with its U.S. close of 3.617% on Tuesday.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, touched 4.0905% compared with a U.S. close of 4.097%.

The dollar dropped 0.21% against the yen to 143.79..

The euro slipped 0.1% on the day to $0.9974, having gained 1.79% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was lower, having fallen nearly 4% since Sept. 26.

"The USD's significant move lower since making a new 20 plus year high last Wednesday, is an entirely logical response to the combination of smartly lower US bond yields and much improved risk sentiment," NAB analysts wrote on Wednesday.

U.S. crude dipped 0.15% to $86.39 a barrel. Brent crude fell flight $91.80 per barrel.

Gold was slightly lower. Spot gold traded at $1,724.6667 per ounce. [GOL/]

(Reporting by Scott Murdoch in Hong Kong; Editing by Sam Holmes)

COMMENTS

More Related News

Bruising Stock Reversal Shows How Fed
Bruising Stock Reversal Shows How Fed's Pivot May Come Too Late

(Bloomberg) -- For many investors, December has been a shocker in the stock market. After getting sucked in by a rousing seven-week rally, they've now had to...

Bank of Canada increases rates by 50 bps, says hikes may be over
Bank of Canada increases rates by 50 bps, says hikes may be over

The Bank of Canada on Wednesday hiked its benchmark overnight interest rate by 50 basis points to 4.25%, the highest level in almost 15 years, and signaled...

California
California's economy continues to grow. How would a recession affect it?

Forecast: State economy should grow faster than the nation's

Inflation miss puts central bankers on back foot
Inflation miss puts central bankers on back foot
  • US
  • 2022-12-07 08:06:08Z

Thomas Barkin, Richmond Federal Reserve President, was poring over the latest inflation-related data one morning this June after breakfast with bank interns ...

Asian equities, oil prices dragged by recession fears
Asian equities, oil prices dragged by recession fears

Asian investors extended a sell-off across global markets Wednesday while oil held losses on growing fears Federal Reserve monetary tightening will tip the...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business