Singapore, Jan. 26 (BNA): Asian stocks rose to a seven-month high on Thursday, as Hong Kong shares caught up to gains in other markets as trade resumed after the three-day Lunar New Year holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.56% to 555.81. Hong Kong’s Hang Seng Index rose 1.6%, Reuters reports.
However, Japan’s Nikkei fell 0.25%.
Trading was thin on Thursday with Australia closed for a holiday and certain parts of Asia, including China, still out for the Lunar New Year.
Traders betting that the US Federal Reserve will soon cut its interest rate hike policy led to a rally after the Bank of Canada on Wednesday became the first major central bank to say it is likely to hold off on further hikes for now.
After a string of big rate hikes last year, the US central bank is now widely expected to raise interest rates by a smaller 25 basis points next week on signs of easing inflation.
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“Today’s US GDP release will be of key importance for gauging whether market expectations shifting in favor of a soft landing rather than a recession can continue to hold,” Saxo strategists said in a note to clients.
The prospect of a softer pace of monetary tightening has fueled expectations of a so-called soft landing – a scenario in which inflation eases on the back of weak but resilient economic growth.
But weak corporate earnings so far revived concerns about the economic impact of the Fed’s restrictive policy and the S&P 500 ended lower overnight.
Boeing on Wednesday reported a bigger loss for 2022 due to weakness in its defense unit as it warned of more supply chain problems, as the US planemaker missed Wall Street expectations for revenue and earnings per share in the fourth quarter.
Investors’ attention will also be on the Bank of England and European Central Bank meetings scheduled for next week, as traders look for clues as to when central banks are likely to turn dovish.
In the currency market, the dollar index, which measures the greenback against six major competitors, was at 101.57, not far from the eight-month low of 101.51 it touched last week.
The Japanese yen strengthened 0.32% to 129.19 per dollar, while the British pound was last trading at $1.2407, up 0.06% on the day.
The yield on the 10-year Treasury fell 1.7 basis points to 3.445%, while the yield on the 30-year Treasury note fell 2.2 basis points, at 3.602%.
A closely watched part of the US Treasury yield curve measuring the gap between yields on the 2- and 10-year Treasury notes, which is seen as an indicator of the economic outlook, was at -68.8 basis points. Analysts said the inversion of this curve has predicted eight of the past nine recessions.
The two-year US Treasury yield, which usually moves in accordance with interest rate expectations, fell 0.6 basis points to 4.131%.
Oil prices rose as US crude inventories rose less than expected, with US West Texas Intermediate crude up 0.42% at $80.49 a barrel and Brent at $86.24, up 0.14% on the day.
Gold prices hit a nine-month high on Thursday, with spot gold settling at $1,946.73 an ounce, after reaching its highest level since April 2022.