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

Ankul Banerjee

SINGAPORE, Oct 27 (Reuters) – Asian shares rose on Thursday on expectations that major central banks may start to slow the pace of interest rate hikes in coming months, while a weaker dollar boosted commodities and pushed U.S. Treasury yields lower .

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.59 percent, rising for a third straight session. The index is down about 2% this month.

Australia’s resources index rose 0.81%, while Japan’s Nikkei opened 0.09% lower.

Chinese shares opened 0.1% higher on Friday, while Hong Kong’s Hang Seng opened 2.6% higher.

Chinese stocks have had a tumultuous week, with global investors selling off Chinese assets on Monday amid fears that President Xi Jinping’s new leadership team will put ideology over the economy.

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But growing investor expectations that the Federal Reserve and other central banks may halt their aggressive policy of raising interest rates have helped ease investor jitters and capped a rally in the dollar.

“Global yields were broadly lower as earlier expectations of central bank tightening further subsided,” said Taylor Nugent, markets economist at National Australia Bank in Sydney.

Nugent also pointed to a smaller-than-expected 50-percentage-point rate hike announced by the Bank of Canada on Wednesday, adding that it fueled expectations that the Federal Reserve will begin shifting to a rate hike of a similar magnitude in December.

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U.S. Treasury yields fell, helped by a weaker dollar and expectations the Federal Reserve would become less hawkish.

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

In currency markets, the euro broke above $1 for the first time in five weeks to a peak of $1.00935 as investors awaited the European Central Bank’s (ECB) interest rate decision, with the market expecting a 75bps rate hike in the euro. .

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

The yen rose 0.18% to $146.09 against the dollar.

A slide in the U.S. dollar 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 surging more than 3 percent 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 gained 19 cents, or 0.2%, to $88.10.

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


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