Asian stocks rise after Fed signals softer rate hikes

Hong Kong — Asian shares rose on Friday after Wall Street reversed losses on signals of a measured policy tightening approach from the US Federal Reserve as well as on prospects of a solid economic recovery in China.

Global markets have been buffeted by a raft of strong US data over recent weeks, including US jobless claims overnight, that suggested the Fed will need to raise rate further and for longer.

But investors breathed a sigh of relief after Atlanta Federal Reserve president Raphael Bostic said he favoured “slow and steady” quarter-point US rate increases to limit risk to the economy.

Markets are also watching out for China’s annual meeting of parliament, which kicks off on Sunday, to set economic targets and elect new top economic officials.

Emerging signs of a steady rebound in China’s economy after the relaxation of stringent curbs in December have also helped to revive appetite for riskier assets.

“We expect the government to provide a pro-growth policy agenda, with support for both infrastructure and property sectors,” said analysts at Commonwealth Bank of Australia in a note.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5% in early trade, on track for its first weekly rise in five. The index is up 1.6% so far this month. US stock futures, the S&P 500 e-minis, were down 0.07% at 3,982, but the major indices ended up in regular trading overnight.

Australian shares were up 0.36%, helped by gains in miners and financials, while Japan’s Nikkei stock index rose 1.42%.

China’s blue-chip CSI300 index was steady in early trade. Hong Kong’s Hang Seng index advanced 0.45%.

US stocks rose on Thursday, reversing earlier losses, as Treasury yields pulled back from earlier highs, after the rates comments from Bostic.

The Dow Jones Industrial Average rose around 1%, while the S&P 500 and Nasdaq Composite both gained around 0.75%, even as Tesla fell nearly 6% after the company failed to impress investors with few details on its plan to unveil an affordable electric vehicle.

The yield on benchmark 10-year Treasury notes touched 4.0556% compared with its US close of 4.073% on Thursday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, rose to 4.8913% compared with a US close of 4.904%.

In currencies, the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was down at 104.86. The index is now up more than 1% for the year, but still down from a September high of around $114.

The dollar eased 0.15% to ¥136.55, after climbing to 137.10 overnight, the highest since December 20.

The euro rose 0.08% to $1.0602, after moving off a nearly two-month low of $1.0533 at the start of the week.

In the energy market, oil prices remained firm, boosted by signs of a strong economic rebound in top crude importer China and easing worries of aggressive US rate hikes.

US crude dipped 0.36% to $77.88 a barrel. Brent crude touched $84.45 per barrel.

Gold was slightly higher. Spot gold was traded at $1839.95/oz.

Reuters