Asian markets build on global rally as Fed pause hopes grow

Asian markets build on global rally as Fed pause hopes grow

The mood on trading floors has lightened this week on hopes the Federal Reserve will not hike interest rates again this year
The mood on trading floors has lightened this week on hopes the Federal Reserve will not hike interest rates again this year. Photo: MOHD RASFAN / AFP
Source: AFP

Asia extended a global markets rally Wednesday on a growing belief the Federal Reserve is finished with its interest rate hiking cycle, while optimism was also boosted by a report that China is considering a large burst of economic stimulus.

While uncertainty caused by the Israel-Hamas crisis is keeping nerves on edge, the mood on trading floors has improved after a healthy US jobs report last week and dovish comments from a number of top US monetary policymakers.

On Wednesday, Atlanta Fed boss Raphael Bostic said rates were already tight enough to bring inflation back down to officials' two percent target, echoing some of his counterparts, who see a spike in Treasury yields as tempering the need to lift borrowing costs further.

The remarks were welcomed by many traders who feared that a series of hit readings on the US economy in recent weeks was putting pressure on the bank to announce one more increase before the end of the year.

Read also

Asian markets rally on Fed rate hopes, oil eases after surge

Data suggested there was a more than 60 percent chance the Fed would stand pat in December, down from 60 percent for a hike seen just a week ago.

All three markets on Wall Street posted another day of gains thanks to the more risk-on environment, while the so-called fear gauge hit a two-week low.

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ click on “Recommended for you” and enjoy!

"A steady stream of dovish messaging from the Fed is just what the rally doctor ordered," said Stephen Innes at SPI Asset Management.

He added that with 10-year US Treasury yields nearly 25 basis points down from their pre-jobs data level "there is a growing sense we have seen peak rates, but significantly, investors are strongly coming around to the idea that the Fed has finally reached the end of its aggressive rate hike runway".

Read also

Oil prices jump as Hamas attack on Israel fuels supply fears

In early Asian trade Tokyo, Sydney, Seoul, Taipei, Manila and Jakarta were all up.

Hong Kong piled on more than one percent and Shanghai was also enjoying a day in the sun after Bloomberg News reported that Chinese officials were looking at issuing almost $140 billion in sovereign debt to boost the beleaguered economy.

The cash would be spent on various projects in a bid to kickstart economic activity, which has been flat for most of the year, even after the lifting of draconian Covid containment rules at the end of 2022.

While not as big as the bazooka that was unveiled in 2008 during the financial crisis, the big-spending plan would provide a boost to investors who have been calling for more and wider support from the government after numerous targeted measures.

"The ad hoc issuance of additional debt from the central government could provide extra policy support and more resources to re-engineer a stronger and faster recovery," Bruce Pang, at Jones Lang Lasalle, said.

Read also

IMF, World Bank to tackle climate goals among reforms at annual meetings

"China's recovery story could be a relay race" started by infrastructure investment that is then taken over by spending by businesses and consumers.

Oil prices edged up slightly as the market stabilised after Monday's surge fuelled by Hamas's deadly attack on Israel that sparked fears of a wider conflict in the crude-rich Middle East.

There had been a worry that Iran could be dragged into the crisis after claims it was involved in the assault. However, Tehran has denied the charges and the United States said it had no direct evidence linking Iran to the violence.

Key figures around 0230 GMT

Tokyo - Nikkei 225: UP 0.5 percent at 31,917.48 (break)

Hong Kong - Hang Seng Index: UP 1.6 percent at 17,935.20

Shanghai - Composite: UP 0.4 percent at 3,088.29

Euro/dollar: DOWN at $1.0605 from $1.0609 on Tuesday

Dollar/yen: DOWN at 148.65 yen from 148.68 yen

Pound/dollar: UP at $1.2293 from $1.2281

Read also

US jobseekers face tougher search despite robust market

Euro/pound: DOWN at 86.27 pence from 86.32 pence

West Texas Intermediate: UP 0.1 percent at $86.04 per barrel

Brent North Sea crude: UP 0.2 percent at $87.78 per barrel

New York - Dow: UP 0.4 percent at 33,739.30 (close)

London - FTSE 100: UP 1.8 percent at 7,628.21 (close)

New feature: Сheck out news that is picked for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.