Asia stocks creep higher on hopes Fed will tone down hikes

Asian markets gain, investors anxious for U.S. rate hike clues


HONG KONG: Asian stocks were broadly bullish on Thursday, while the dollar edged lower as investors nervously awaited the US Federal Reserve’s annual Jackson Hole meeting for clues on the extent of future rate hikes.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged up 0.3% after U.S. stocks edged higher in the previous session.

Australian shares (.AXJO) were up 0.7%, Japan’s Nikkei added 0.52% (.N225) and China’s CSI300 (.CSI300) was up 0.27%.

The Fed’s annual monetary policy meeting in Jackson Hole, Wyoming, begins Friday.

NAB economics director Tapas Strickland said investors now expect the federal funds rate to peak at 3.80% in March 2023, up from 3.62% two weeks ago.

“The market moves at least in line with the hawkish stance Fed officials have seen in recent weeks,” he added.

Interest rate futures imply a 60% chance of the Fed raising rates by 75 basis points in September.

In early Asian trade, the yield on the benchmark 10-year U.S. Treasury note rose to 3.1095%, compared with a U.S. close of 3.106% on Wednesday.

The two-year Treasury yield hit 3.4028%, compared with a U.S. close of 3.386%, as traders expected a rise in the federal funds rate.

Yields also rose overnight, but that didn’t stop U.S. stocks from rising Wednesday.

The Dow Jones Industrial Average (.DJI) closed up 0.18%, the S&P 500 (.SPX) added 0.29% and the Nasdaq Composite (.IXIC) added 0.41%.

USD/JPY edged down 0.01% to 137.09. Still some distance from this year’s high of 139.39 set in mid-July.

The European single currency was flat at $0.9968 in early Asian trade, down 2.45% in a month.

The U.S. dollar index, which tracks the greenback against a basket of other major trading partners, was slightly weaker in Asia at 108.51.

“Expectations of a hawkish message from FOMC Chairman Powell at Jackson Hole could put upward pressure on the dollar.”

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