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 heightened expectations that major central banks may begin to slow the pace of interest rate hikes in coming months, while a weaker dollar lifted commodities and pushed up Treasury yields. 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, while Hong Kong’s Hang Seng Index was up 2.6% at the open.

Chinese stocks have had a turbulent week, headlined by Monday’s brutal sell-off as global investors dumped Chinese assets, worried that President Xi Jinping’s new leadership team would put ideology ahead of the economy.

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But there is growing expectation among investors that the Federal Reserve and other central banks may stop their aggressive rate-hiking policies, which has helped ease investor jitters and calm the dollar’s rally.

“Yields tend to be lower around the world because the prospects for central bank tightening are a bit longer,” said Taylor Nugent, markets economist at National Australia Bank in Sydney.

Nugent also noted that the Bank of Canada on Wednesday announced a smaller-than-expected rate hike of 50 percentage points, saying he expected the Fed to begin the transition to rate hikes of the sort same in December.

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US Treasury yields fell, helped by a weaker dollar and Fed prospects became less hawkish.

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

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), with markets expecting a 75 bp rate hike to deliver. .

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Sterling was trading at $1.1624, down 0.03% on the day after hitting 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 gold scaling 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 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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