Singapore, Oct. 26 (BNA): Asian stocks rose on Wednesday as investors clung to hopes that the pace of US and global interest rate hikes would begin to slow, despite US futures pulling back after disappointing results from tech giants Alphabet and Microsoft.
E-mini futures for the S&P 500 index fell 1% in early trading after Google-owner Alphabet reported lower-than-expected ad sales after a bell and Microsoft missed projected revenue forecasts, potential early signs of a slowdown in the US economy, according to Reuters.
Meanwhile, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%, led by a rebound in Hong Kong, while Japan’s Nikkei rose 1.1% by mid-morning.
The main index of the Chinese mainland advanced 1%, while Hong Kong shares rose 2%, attempting another rebound after a massive sell-off of Chinese assets on Monday by global investors worried about the direction of Beijing’s policy.
Xi Jinping’s new leadership team has raised concerns that the party’s more powerful leadership will increasingly prioritize the state over the private sector, and maintain strict anti-coronavirus policies until next year.
US economic data on Tuesday showed home price growth slowing and consumer confidence waning, with some indication that the Federal Reserve’s rate hike is beginning to cool the labor market.
“The continuing topic of bad economic news is good news for risk markets, US stocks continue to bask in the glow of hints last Friday of a lower pace of Fed tightening,” Ray Atrell, head of FX strategy at National Australia Bank in Sydney, said in a note.
Traders and economists are expecting another 75 basis point increase from the Fed next Wednesday, but the outlook is increasing for a slowdown to half a point in December.
Treasuries rose sharply overnight, with the yield on US 10-year government bonds dropping more than 12 basis points. It settled at 4.0937% on Wednesday.
In Australia, inflation accelerated to a 32-year high in the last quarter as the cost of building homes and gas rose. The surprise increased pressure on the central bank to reverse the recent protectionist trend, although markets doubt there will be a dramatic turnaround.
The Australian dollar’s support was small and fleeting, which left it somewhat flat at $0.6386. Three-year Australian government bond futures retreated from their peak but managed to hold steady for the day at 96.400.
In the currency markets, the dollar plunged to a three-week low against its major peers, while the pound sterling stalled near a six-week peak reached on Tuesday after Britain’s new Prime Minister Rishi Sunak pledged to lead the country out of an economic crisis.
The pound was last traded at $1.1445, down 0.19% on the day, but not far from Tuesday’s high of $1.1500, a level last seen on September 15.
The Japanese yen was down 0.30% against the dollar at 148.39 per dollar. The troubled currency touched a 32-year low of 151.94 on Friday, but eased after two bouts of suspected BoJ intervention on both sides of the weekend.
Japanese government bonds rose sharply after the Bank of Japan said once again that it will increase bond purchases.
Oil prices fell as industry data showed US crude inventories rose more than expected, fueling fears of a global recession that would slash demand.
Brent crude futures for December fell $1.17, or 1.3 percent, to $92.35 a barrel at 01:11 GMT, after jumping 26 cents in the previous session. US West Texas Intermediate crude futures for December delivery fell 88 cents, or 1%, to $84.44 a barrel.
HF