(Bloomberg) — Stocks in Asia rose after traders trimmed bets on U.S. Federal Reserve interest rate hikes, with expectations of more stimulus in China adding to gains.
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A benchmark Asian stock index rose for a fifth day, marking its longest winning streak since early September. U.S. stock futures rose slightly after both the S&P 500 and Nadaq 100 rose 0.5% on Tuesday, while European contracts fell.
Ahead of Wednesday’s September meeting minutes, Mary Daly, president of the Fed Bank of San Francisco, said tighter financing conditions could mean the central bank “doesn’t have to do as much.” Hikes can be carried out for the time being.
Stock indexes in Hong Kong rallied, led by technology stocks, while stocks on the mainland rose after Bloomberg reported that China is considering increasing its budget deficit as the government prepares new stimulus measures.
“Asian stocks saw a double gain today on less hawkish stance from Fed members and speculation about a stimulus program in China,” said Charu Chanana, market strategist at Saxobank. “But the Fed will have to stick with its higher interest rate for longer if it wants to continue to see markets do the job of raising rates, and there is also a risk that geopolitical tensions could escalate.”
According to Anna Wong of Bloomberg Economics, investors will be watching for clues in the minutes that suggest the Fed may not follow through on the latest rate hike announced in its economic forecasts. In addition, the final inflation figures for Germany are due in September.
Ten-year Treasuries steadied after gains on Tuesday as U.S. Treasury yields posted some of their biggest one-day declines all year. Fed swaps currently have a greater than 60% chance that the Fed will hold rates in December, compared to a 60% chance of another rate hike by then, just a week ago.
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The Bloomberg Dollar Index was little changed after its fifth straight decline. The currencies of emerging Asian countries rose, especially the Korean won and the Thai baht.
Read more: Thailand’s interest rate board finds policy settings suitable to support growth
“Policymakers have begun to recognize that the need for further policy action is diminishing as financial conditions have tightened significantly following the recent rise in Treasury yields,” said Ben Jeffery of BMO Capital Markets. “This recognition may have reduced fears about the need for additional rate increases.”
Global investors were also watching geopolitics closely. US President Joe Biden promised to provide full support to Israel, including ammunition supplies and intelligence assistance.
Oil prices maintained gains after rising earlier this week as the war between Israel and Hamas remained contained and Saudi Arabia pledged to help ensure market stability. Gold prices remained stable near their peak this month.
Back in Asia, South Korea’s Kospi benchmark led the regional advance and was heading for its biggest gains in nine months. Samsung Electronics Co. gave the biggest boost as traders focused on a smaller profit decline for the chip giant.
Important events this week:
Germany CPI, Wednesday
Meeting of NATO defense ministers on Wednesday in Brussels
Russian Energy Week in Moscow with representatives of OPEC members and others, Wednesday
US PPI, Wednesday
Minutes of the Fed’s September monetary policy meeting, Wednesday
The Fed’s Michelle Bowman and Raphael Bostic will speak at separate events on Wednesday
Japanese machinery orders, PPI, Thursday
Asahi Noguchi of the Bank of Japan speaks on Thursday
British industrial production, Thursday
US initial jobless claims, CPI, Thursday
The European Central Bank will publish a report on its September monetary policy meeting on Thursday
The Fed’s Raphael Bostic speaks on Thursday
China CPI, PPI, trade, Friday
Eurozone industrial production, Friday
University of Michigan Consumer Sentiment, Friday
Citigroup, JPMorgan, Wells Fargo and BlackRock’s results as the quarterly reporting season begins on Friday
The G20 finance ministers and central bankers will meet on Friday at the IMF meeting
ECB President Christine Lagarde and IMF Managing Director Kristalina Georgieva speak at the IMF panel on Friday
The Fed’s Patrick Harker speaks on Friday
Some of the key moves in the markets:
Shares
S&P 500 futures were little changed at 6:39 a.m. London time. The S&P 500 rose 0.5%
Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.6%
Japan’s Topix has hardly been changed
Hong Kong’s Hang Seng rose 1.8%
The Shanghai Composite rose 0.2%
Euro Stoxx 50 futures fell 0.5%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0607
The Japanese yen fell 0.1% to 148.88 per dollar
The offshore yuan was little changed at 7.2912 per dollar
The Australian dollar fell 0.2% to $0.6420
The British pound was little changed at $1.2293
Cryptocurrencies
Bitcoin fell 1.1% to $27,108.3
Ether fell 0.2% to $1,556.96
Tie up
The 10-year Treasury yield fell one basis point to 4.64%
Japan’s 10-year yield fell one basis point to 0.765%
Australia’s 10-year yield fell three basis points to 4.43%
raw materials
This story was produced with support from Bloomberg Automation.
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