A woman walks past a man studying an electronic board displaying Japan’s Nikkei average and stock prices outside a securities firm on March 20, 2023 in Tokyo, Japan.Reuters/Androniki Christodoulou/File photo Obtaining license rights
SINGAPORE, Nov 15 (Reuters) – Asian stocks rose to a two-month high on Wednesday on hopes of Chinese stimulus and a halt to U.S. interest rate hikes, but the dollar suffered on steady U.S. inflation. made up for significant losses. report.
MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) rose 2.3% by the mid-trading break in Hong Kong, its highest since mid-September and its biggest single-day gain since January. recorded an increase in
The Hang Seng (.HSI) rose nearly 3%, above its 50-day moving average, while Japan’s Nikkei average (.N225) rose 2.3%.
Bond markets from Australia to South Korea posted their biggest gains since March, but gains in U.S. Treasuries and U.S. and European stock futures slowed in solid trading.
Data on Tuesday showed the U.S. headline consumer price index was flat in October, defying expectations for a 0.1% rise. Core CPI was also 0.2%, lower than the expected 0.3%.
“I think the CPI numbers are just the last guy being pushed to cover the shortfall,” Nomura’s chief macro strategist Naka Matsuzawa said by phone from Tokyo.
He sees a “more complex” process ahead, with stock market strength ultimately colliding with bond market expectations that a slowing economy will prompt interest rate cuts.
“The bond market is probably more vulnerable than stocks,” he said.
Overnight, the Nasdaq Index (.IXIC) rose 2.4% and the small-cap Russell 2000 Index (.RUT) rose 5%. The US dollar fell 1.6% against the euro and 2% against the Australian and New Zealand dollars.
Interest rate futures markets are leaning toward pricing in a rate cut as early as May, with a 30% chance of a rate cut happening even sooner, in March. Two-year U.S. Treasury yields fell 22 basis points overnight, but remained mostly stable at 4.84% through Asian trade.
The next focus for financial markets will be on UK inflation figures due at 07:00 GMT, US retail sales due at 13:30 GMT, and the expected This is a morning meeting between US President Joe Biden and Chinese President Xi Jinping.
Beijing support
Adding to the cheer in Asian markets were strong industrial production and retail sales in China, as well as plans by China to provide 1 trillion yuan ($137 billion) in low-cost loans to revitalize the housing market. Bloomberg News reported that.
In Shanghai, iron ore prices rose to a two-and-a-half-year high, and copper rose to a three-week high.
The Mainland CSI300 Index (.CSI300) rose 0.6%. The Hang Seng Index (.HSMPI) of mainland real estate developers rose 4.3%.
China’s retail sales rose 7.6% in October, which may have been partly influenced by the Golden Week holiday earlier in the month. The real estate industry remains in severe turmoil, with investment from January to October down 9.3% year-on-year.
“It is clear that the Chinese government has taken a more aggressive stance in recent weeks to support economic recovery,” HSBC economists said in a note to clients. “As the real estate sector continues to highlight uncertainties, we believe the Chinese government will continue to increase support through both fiscal and monetary instruments.”
The yuan hit a three-month high of 7.2356 yuan to the dollar as the dollar weakened. The euro soared above its 200-day moving average overnight and remained at $1.0877, while the pound held strong gains at $1.2491.
Data on Australian wages released on Wednesday showed high inflation is impacting pay agreements, although annual growth of 4% remains well below many other developed countries.
Meanwhile, Japan’s economy contracted in the July-September period, official figures show, and the yen remains out of favor as the slowdown puts a damper on expectations for interest rate hikes. The yen hit a 16-year low of 163.9 yen to the euro, and pared back some of Tuesday’s gains to trade at 150.68 yen to the dollar.
Two-year Japanese government bonds posted their biggest rise since April 2022, with yields dropping more than 3 basis points to 0.055%.
Brent crude oil futures rose 0.4%, or 31 cents a barrel, to $82.78.
(This article has been reedited to correct the spelling of “Russell” in paragraph 9)
Report by Tom Westbrook.Editing: Edmond Claman
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