MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.9% to 557.65 and was set for its fifth straight day of gains.
Asian equities inclined to a fresh seven-month high on Thursday, where Hong Kong shares are busy playing catch-up to other market gains as trade commenced after a pause of the three-day Lunar Year Holiday.
The index has rallied 10% so far in January, buoyed by expectations of a robust economic repercussion in China and by aspirations that most major central banks are nearing an end to hefty rate rises.
On Thursday, trading was thin with Australia closed for a holiday and certain parts of Asia, including China, still away for the Lunar New Year. The upbeat mood looked set in Europe, with Eurostoxx 50 futures up 0.58%, German DAX futures 0.58% higher, and FTSE futures up 0.30%.
It all started when traders bet that the U.S. Federal Reserve will soon tone down its invasive rate hike policy, which got a lift after the Bank Of Canada on Wednesday raised rates, but became the first major central bank to say it would likely hold off on further increases for now.
On the contrary, Analysts are expecting the Feds to eventually limit its interest rate hikes this year, for some believe the meeting in February is a bit too early for that. “We believe the Fed will make a special effort to avoid suggesting that the end of the tightening process is in sight,” said Kevin Cummins, Chief Economist at NatWest Markets.
Cummins said it was the committee that would go out of its way to keep the official policy statement free of anything that could be interpreted as a suggestion that a pause might be under consideration just yet.
“The U.S. GDP release today will be part of key interest to gauge whether the market expectations are shifting in favor of a soft landing rather than a recession that could continue,” Saxo Strategists said in a note to clients.
Soft Landing is a scenario where inflation eases against a backdrop of weakening but still anticipates economic growth. Hong Kong’s Hang Seng Index surged 1.7% on its first day of trade in the year of the Rabbit, while Japan’s Nikkei fell 0.25%.
In the currency market, the dollar index which measures the U.S. currency against six major competitors was at 101.64, not far off the eight-month low of 101.51 it touched last week.
The Japanese Yen intensified by 0.22% to 129.32 per dollar, while sterling was last trading at $1.2394, down 0.05% on the same day. The yield on 10-year Treasury notes was down 2.1 bps to 3.441%, while the yield on the 30-year Treasury bond was down 3 bps to 3.595%.
The indicator of economic expectations was at -68.7 bps. The transposition of this curve has predicted eight of the last nine recessions, analysts have said.
- Published By Team Hongkong Journalist