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 may begin to slow the pace of interest rate hikes in the coming months, while the withdrawal of the dollar boosted commodities and pushed treasury yields lower.

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

Australia’s resource-heavy 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.

Chinese stocks had a tumultuous week, headlined by a brutal sell-off on Monday as global investors dumped Chinese assets, worried that President Xi Jinping’s new leadership team would put ideology over reality. economy.

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But growing investor expectations that the Federal Reserve along with other central banks could stop their aggressive rate hike policies helped ease investor concerns and slow the dollar’s rally.

“Yields are generally lower around the world because the prior run of expectations for central bank tightening is still modest,” said Taylor Nugent, a market economist at National Australia Bank in Sydney.

Nugent also noted that the Bank of Canada on Wednesday announced a slightly more anticipated rate hike of 50 percentage points, and said it was anticipating expectations that the Fed would begin moving a similarly large rate hike. 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 prompted concerns of a slowdown after some of Europe’s biggest banks also warned of growing risks as the economy falters.

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

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

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

The sliding dollar also helped push gold prices higher, with spot gold climbing to 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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