Tokyo, July 14 (BNA): Asian stocks rose on Friday, on track to reach their best week of the year, as falling inflation in the United States fueled speculation that the Federal Reserve may hold off on raising interest rates after this month.
The dollar fell to a 15-month low against major currencies, and US Treasury yields fell near multi-week lows after the steepest weekly decline in four months.
Gold prepared for its best week in three months as the dollar faltered, while crude oil rose to its highest level in nearly three months, according to Reuters.
While money market traders still see a quarter-point hike in the federal funds rate on July 26 as close to a sure thing, they have discounted the chances of another this year to just 1 in 5.
Data on Thursday showed the smallest increase in US factory gate inflation in nearly three years, bolstering moderate inflation expectations after a report the previous day showed that consumer price gains eased to the slowest pace in more than two years.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7% on Friday, putting it on track for a weekly advance of 5.4%, the largest in eight months.
Hong Kong’s Hang Seng rose 0.52% and mainland China’s blue-chip stocks rose 0.12%. South Korea’s Kospi index jumped 1%.
Even so, Japan’s Nikkei was notably farther away, reversing early gains to post another 0.43% decline as it struggles to find its feet after tumbling from a 33-year peak it reached at the start of this month.
US E-mini stock futures also indicated a reboot of 0.16% lower for the S&P 500, after the index rose 0.85% overnight.
Meanwhile, the US dollar index – which measures the currency against six major peers – fell around 0.1% to touch 99.637 for the first time since April last year.
The two-year US Treasury yield, which tends to be more sensitive to the Fed’s policy outlook, fell to 4.63%, after falling 30 basis points this week, extending its slide from last week’s 16-year high above 5%. .
Ten-year yields are down around 3.77% after a 28 basis point drop since last Friday, when they hit an eight-month high of 4.094%.
The Japanese market was once again choppy, with the 10-year yield rising to 0.485%, bringing it as close to the BoJ’s policy ceiling of 0.5% since March 10th.
Speculations that the Bank of Japan may widen its 10-year yield range this month has been rising since the employment report a week ago showed solid wage growth.
In Australia, the government’s appointment of Deputy Governor Michelle Bullock to lead the RBA from mid-September had little impact on the markets.
The Australian dollar settled at $0.6891, two days after gaining 1.5% against its US counterpart, taking it to the highest level in a month.
In commodities, gold rose to a one-month high of $1,963.59, supported by dollar weakness. It has risen about 2% this week.
Brent crude futures rose 27 cents, or 0.3%, to $81.63 a barrel on Friday. US West Texas Intermediate crude futures rose 35 cents, or 0.5%, to $77.24.
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