Asian stocks are poised for gains on the heels of a rally in US shares after the Federal Reserve Chair Jerome Powell said the central bank has made progress in its battle against inflation.
Australian stocks rose in early trading, while futures for Japan gained and contracts on Hong Kong slipped. A surge in US-listed Chinese shares in the Nasdaq Golden Dragon China Index should also support risk sentiment in the region.
The S&P 500 jumped more than 1% after Powell said the “disinflation process has started,” suggesting the aggressive tightening cycle is starting to have its desired effect of reducing the pace of price growth. The tech-heavy Nasdaq 100 outperformed major benchmarks, closing at the highest since September.
As China equity investors partake in the yearly toss, can they expect good fortune to arrive at their doorsteps? Read on as we draw parallels between the auspicious symbolism in lo-hei and the recent developments in China.
In US after-hours trading, Meta Platforms Inc. surged, leading social-media stocks higher, after reporting better-than-expected sales during the holiday quarter.
Australian bonds gained Thursday, with 10-year yields dropping 6 basis points to 3.51%. That followed a surge in Treasuries Wednesday, with most yields sinking at least 10 basis points, as investors bet that economic conditions are likely to keep the Fed from the additional rate increases policy makers still anticipate. Swaps traders in the US anticipate a half percentage point drop in cuts from the June peak.
“US sector performance was consistent with the big rally in fixed income across the curve, which for Asia-Pacific should support duration proxies like tech and soft landing beneficiaries like consumer discretionary,” said Chamath De Silva, senior portfolio manager for BetaShares Holdings.
The Aussie and yen held Wednesday’s gains that sent the Australian currency up more than 1% and Japan’s currency higher by 0.9%. The dollar fell broadly against peers, sending a gauge of the greenback’s strength to the lowest since April.
The focus in Asia will shift to firms related to Gautam Adani’s flagship Adani Enterprises Ltd., after the company’s decision to pull a large stock offering caused bonds issued by companies in the group to plunge to distressed levels.
Later, central banks in Europe will be center stage with both the European Central Bank and the Bank of England expected to raise rates by half a percentage point each, Bloomberg reported.
In the US, the Fed raised rates by 25 basis points Wednesday as widely expected. The central bank warned ongoing rate increases would likely be warranted and that officials were discussing a couple more hikes to get policy restrictive enough to beat back inflation.
But Powell, during the press conference, sidestepped a question about the recent easing of financial conditions, a measure of market stresses that the central bank monitors for the effectiveness of its policies. The focus is “not on short-term moves but on sustained changes.” Investors had been bracing for harsh commentary.
