Asian shares hit 2-week high as Fed talks soften

Statues of bulls are erected outside Exchange Square in Hong Kong, China on August 18, 2023. The font of the Hang Seng Stock Index and a screen showing stock prices are erected. Reuters/Tyrone Siu/File Photo Get licensing rights

• The MSCI AxJ index reached a 2-week peak for the fourth consecutive session
• Hong Kong shares rise on stimulus report
• Gas prices jump in Europe on pipe vandalism concerns

SINGAPORE, Oct 11 (Reuters) – Asia’s stock markets rose on Wednesday on expectations of stimulus in China and strong earnings in South Korea, while a dovish stance from Federal Reserve officials led traders to expect a cut in U.S. interest rates. The dollar declined. Expectations.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.5%, on pace for its best session in 2-1/2 months. South Korea’s Kospi (.KS11) was up 2.4% and eyeing its best day since January as chip and battery earnings hit.

The Australian dollar hit a one-week high on the greenback, sterling hit a three-week peak and the kiwi hit a two-month high, although the moves were volatile and small as traders awaited US producer prices and Thursday’s CPI data later in the day. Was doing.

Several Fed officials have noted that the recent rise in long-term yields could help in their inflation-fighting work.

Atlanta Fed President Raphael Bostic was applauded when he told a room full of bankers in Nashville on Tuesday: “I really don’t think we need to raise rates now.”

Bond markets were steady during the Asia session, with benchmark 10-year Treasury yields at 4.65% – about 24 basis points below Friday’s 16-year peak. Thirty-year yields, which were above 5% last week, fell 2 bps to 4.81%.

“All other things being equal, higher back end yields now mean less tightening by the Fed,” said Brent Donnelly of Spectra Markets.

“The failure of 30-year yields to stay above 5%… is another signal that peak fixed income (volatility) and perhaps peak yields have yet to be reached,” he said.

“I think stocks end the year higher as they benefit from stabilization in fixed income, oversold conditions and positive seasonality.”

A Bloomberg report on China preparing stimulus to help its economy also supported the mood, especially in Hong Kong where a broad rally lifted the Hang Seng (.HSI) above 18,000 for the first time in two weeks.

The Shanghai Composite (.SSEC) rose only 0.3%.

talk off

Commodity markets have remained stable since Monday’s surge in oil prices amid concerns that a surprise attack by Palestinian militants on Israel could spark a wider conflict. Brent futures were trading at $87.90 a barrel after reaching $89 on Monday.

European gas prices, which had jumped on reports of violence in the Middle East, rose further on concerns about vandalism at gas pipes in Finland, with the benchmark Dutch contract hitting a seven-month high on Tuesday.

Elsewhere in foreign exchange trading, the yen held on to a small bounce as Middle East tensions favored safe-haven assets, last trading at 148.94 per dollar.

The euro barely bounced back to $1.0601.

U.S. stock futures were steady and European futures hovered where cash trading halted Tuesday.

Shares of Samsung (005930.KS) jumped 3% after a smaller-than-expected decline in third-quarter profit boosted hopes that the memory chip market is finally turning around. Shares of battery maker LG Energy Solution (373220.KS) rose 7% after it said its third-quarter profit was likely to rise 40% from a year earlier.

qantas Shares in Australia had their best session in three months after the airline said its chairman would resign as it looks to repair its tarnished reputation.

According to people familiar with the matter, Exxon Mobil is expected to say on Wednesday it will buy U.S. rival Pioneer Natural Resources (PXD.N) for about $60 billion.

Pepsi (PEP.O) started the US earnings season with an encouraging report, which was able to lift prices and the chief financial officer expects a modest profit ahead – a good sign for consumption but perhaps a warning on inflation. .

The European Central Bank’s survey on inflation expectations is due later on Wednesday. At the end of the week, US earnings season is in full swing and big banks have seen profits rise.

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