Asian shares rise on hope of slowing rate hikes

Singapore — Asian shares rose on Thursday on growing expectations that major central banks could start slowing the pace of interest-rate hikes in coming months, while the dollar’s retreat lifted 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 straight session of gains. The index is down roughly 2% for the month.

Australia’s resources-heavy share index advanced 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.

China 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 before the economy.

But an increasing expectation among investors that the Federal Reserve along with other central banks may stall their aggressive rate-hike policies has helped soothe investor jitters and blunted the dollar’s rally.

“Yields are generally lower globally as the earlier run up in expectations for central bank tightening are pared a little further,” said Taylor Nugent, a markets economist at National Australia Bank (NAB) in Sydney.

Nugent also noted the Bank of Canada on Wednesday announced a smaller-than-expected rate rise of 50 percentage points (pp), and saying it fanned expectations that the Fed would start the shift to a similar sized rate rises in December.

US treasury yields fell, helped by a weaker dollar and the expectations of the Fed becoming less hawkish.

Meanwhile, earnings report from Facebook parent Meta Platforms Inc on Wednesday and Samsung Electronics Co Ltd spurred worries of a downturn after some of Europe’s largest banks also warned of growing risks as the economy fizzles.

In the 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 it to deliver a 75 bps rate hike. 

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

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

The slide in dollar has also helped push gold prices higher, with spot gold scaling a two-week high on Wednesday.

Oil prices continued to rise in early Asian trade on Thursday after surging more than 3% in the previous session.

Brent crude futures rose 25c, or 0.3%, to $95.94 a barrel by 0.15am GMT. US West Texas Intermediate (WTI) crude rose 19c, or 0.2%, to $88.10.

Reuters