GLOBAL MARKETS-Asia shares jump as investors anticipate smaller interest rate rises

By Ankur Banerjee

SINGAPORE, Oct 27 (Reuters) – Asian shares rose on Thursday on growing expectations that major central banks could begin to slow the pace of interest rate hikes in the coming months, while a retreating dollar lifted commodity prices and pushed Treasury yields lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 1.59 percent higher and forecast a third straight gain. The monthly index is down about 2%.

Australia’s resource-rich share index rose 0.81%, while Japan’s Nikkei opened 0.09% lower.

China’s stock market opened up 0.1% on Friday, with Hong Kong’s Hang Seng index up 2.6% at the open.

China’s stock markets have had a turbulent week, sparked by Monday’s brutal sell-off as global investors dumped Chinese assets on fears that President Xi Jinping’s new leadership team will put ideology ahead of economics.

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But rising investor expectations that the Federal Reserve, along with other central banks, could halt their aggressive rate-hiking policies have helped ease investor jitters and dampened the dollar’s gains.

“Yields are generally lower around the world as earlier expectations for more central bank tightening are somewhat muted,” said Taylor Nugent, market economist at National Australia Bank in Sydney.

Nugent also noted that the Bank of Canada announced a smaller-than-expected 50-percentage-point rate hike on Wednesday, which he said fueled expectations that the Fed would begin a move to raise rates by a similar amount in December.

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U.S. Treasury yields fell, helped by a weaker dollar and less hawkish Fed expectations.

Meanwhile, earnings reports from Facebook parent Meta Platforms Inc and Samsung Electronics Co Ltd on Wednesday fueled fears of a slowdown after some of Europe’s biggest banks also warned of rising risks as the economy slumps.

In currency markets, the euro rose above the $1 mark for the first time in five weeks, peaking at $1.00935, as investors awaited the European Central Bank’s (ECB) rate decision, which markets expected would lead to a 75bp rate hike. .

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Sterling traded at $1.1624, down 0.03% from the day after the session high of $1.1645.

The yen strengthened 0.18% against the greenback to 146.09 per dollar.

The fall in the dollar has also helped boost gold prices, with gold hitting a two-week high on Wednesday.

Oil prices continued to rise in early Asian trade on Thursday after rising more than 3% in the previous session.

Brent crude futures were up 25 cents, or 0.3%, at $95.94 a barrel by 0015 GMT. U.S. West Texas Intermediate (WTI) crude rose 19 cents, or 0.2%, to $88.10.

(Reporting by Ankur Banerjee; Editing by Simon Cameron-Moore)

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