Asian stocks continued their rally on Friday with investor mood upbeat on hopes the corner has finally been turned in the war on inflation.
Shares and bonds across the region extended a global run as a non-committal Federal Reserve Chair prompted markets to double down on bets that US interest rates have peaked and cuts are on the way.
China stocks rose with consumer-related shares leading the gains, despite a private survey showing the country’s services activity growth was slower-than-expected in October. Hong Kong stocks also advanced, following a rally overnight in New York.
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China’s blue-chip CSI300 Index was up 0.84%, while the Shanghai Composite Index rose 0.71%, or 21.39 points, to 3,030.80. The Shenzhen Composite Index on China’s second exchange advanced 1.17%, or 21.62 points, to 1,875.00.
In Hong Kong, the stock rally overnight in New York boosted sentiment, especially lifting internet stocks. Tech stocks rose 2.3%, with Alibaba and Tencent up 1.8% and 3.1%, respectively.
Shares of China Evergrande opened more than 6% higher before reversing some gains, after news that the troubled developer had proposed a new debt restructuring plan.
The benchmark Hang Seng Index gained 2.52%, or 433.53 points, to 17,664.12.
Elsewhere across the region, in earlier trade, Singapore, Sydney, Seoul and Bangkok added more than 1%. There were also gains in Mumbai, Manila, Taipei, Wellington and Jakarta. Tokyo was closed for a holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan surged 1.7% to its highest level in one week.
Wall Street, Treasuries Advance
Stock futures in Europe and US also gained. Eurostoxx 50 futures rose 0.8% early in Asia, while S&P 500 futures added 0.3% and Nasdaq futures increased 0.5%.
Overnight, the Fed held the policy rate steady in its current 5.25%-5.50% range. While Chair Jerome Powell did not rule out another hike, markets judged he was not quite as hawkish as he might have been.
Fed funds futures rallied as markets pared back the risk of a December hike to about 22% and a January move to 28%. Markets have priced in a 70% chance that the tightening is over and rate cuts could amount to 85 basis points next year, beginning as soon as June.
Wall Street and Treasuries rallied. The S&P 500 gained 1% and the Nasdaq Composite surged 1.6%.
The benchmark 10-year Treasury yield eased another 2 basis points to 4.7089%, the lowest in more than two weeks. Overnight, it tumbled 14 basis points, the biggest daily drop since March, also in part due to a Treasury announcement that said the government will slow increases in the size of its longer-dated auctions.
The next big focal point for the market is the non-farm payrolls data out later on Friday, which analysts expect to show the economy added 180,000 jobs in October, slowing from 336,000 increase the previous month. It will come after private payrolls increased far less than expected.
Apple’s Bellwether Results
And investors are now awaiting the results from Apple later in the day, a bellwether for consumer demand and the tech sector. The Cupertino California-based company is expected to report a 1% decrease in quarterly revenue.
The dollar was again on the back foot on Thursday, falling 0.1% against its peers. The prospect that the Fed is done tightening buoyed risk sensitive currencies the most, with Australian dollar bouncing 0.6% to a three-week high of $0.6428.
The yen continued to regain ground and was up 0.3% to 150.46 per dollar on Thursday. It had hit a one-year low after a Bank of Japan decision to ease its control over the 1% cap on 10-year yields, with the tweak seen as insufficient to close the wide interest rate gaps between Japan and other countries.
Oil prices traded higher as the conflict in the Middle East kept investors on edge about whether it could disrupt oil supplies. Brent crude futures climbed 1.2% to $85.61 a barrel while US West Texas Intermediate futures were at $81.43 a barrel, up 1.2%.
The price of gold was 0.2% higher at $1,985.86 per ounce.
Key figures
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index > UP 2.52% at 17,664.12 (close)
Shanghai – Composite > UP 0.71% at 3,030.80 (close)
London – FTSE 100 > UP 0.17% at 7,459.42 (0933 GMT)
New York – Dow > UP 1.70% at 33,839.08 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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