GLOBAL MARKETS-Asia shares jump as investors anticipate smaller interest rate rises

By Ankur Banerjee

SINGAPORE, Oct 27 (Reuters) – Asian shares rose on Thursday as expectations grew that major central banks would begin to slow the pace of interest rate hikes in coming months, while a dollar retreat lifted commodities and pushed Treasury yields lower.

MSCI’s broad index of Asia-Pacific shares outside Japan was 1.59% higher and set for a third session of gains. The index is down about 2% for the month.

Australia’s resource-heavy share index rose 0.81%, while Japan’s Nikkei slipped 0.09%.

China’s stock market rose 0.1 percent on Friday, with Hong Kong’s Hang Seng index opening up 2.6 percent.

China’s stocks have had a tumultuous week, with global investors dumping Chinese assets in the headlines of Monday’s brutal sell-off, on concerns that President Xi Jinping’s new leadership team will put ideology ahead of the economy.

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But rising expectations among investors that the Federal Reserve and other central banks could curb their aggressive rate-hike policies helped calm investor concerns and dampen the dollar’s rally.

“Yields are generally lower globally as the earlier run on expectations of central bank tightening has led to a slight advance,” said Taylor Nugent, market economist at National Australia Bank in Sydney.

Nugent also said the Bank of Canada announced a smaller-than-expected rate hike of 50 percentage points on Wednesday and fanned expectations that the Fed would begin a shift to similar-sized rate hikes in December.

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US Treasury yields fell, helped by a weaker dollar and Fed expectations became less hawkish.

Meanwhile, earnings reports from Facebook parent Meta Platforms Inc and Samsung Electronics Co Ltd on Wednesday fueled fears of a recession as some of Europe’s biggest banks also warned of rising risks as the economy falters.

In 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), which markets expected would deliver a 75 bp rate hike. .

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

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

The decline in the dollar also helped boost gold prices, with spot gold hitting a two-week high on Wednesday.

Oil prices rose in early Asian trade on Thursday after rising more than 3% in the previous session.

Brent crude futures were up 25 cents, or 0.3%, at $95.94 a barrel by 0015 GMT. U.S. West Texas Intermediate (WTI) crude added 19 cents, or 0.2%, to $88.10.

(Reporting by Ankur Banerjee; Editing by Simon Cameron-Moore)


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