GLOBAL MARKETS-Asian shares higher on signs of U.S. Fed slowdown, China stimulus

By Stella Q

SYDNEY, Nov 24 (Reuters) – Asian shares rose on Wall Street on Thursday, weighed on by signals that the U.S. Federal Reserve may slow the pace of rate hikes and news of fresh economic stimulus from China as the dollar failed to recoup losses. :

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%, boosted by a 0.6% rise in South Korean stocks, a 0.5% rise in Chinese bluechips and a 0.9% rise in Hong Kong’s Hang Seng index.

The Japanese Nikkei rose by 1.3%.

S&P 500 futures rose 0.2% and Nasdaq futures rose 0.3% after U.S. stocks rose modestly on Wednesday.

On Thursday, the Bank of Korea slowed the pace of tightening to a more modest 25 basis points, joining other central banks that have pulled away from big hikes amid a looming global recession.

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Minutes from the US Federal Reserve’s latest meeting also showed that a “substantial majority” of Fed policymakers agreed that it would “probably be appropriate soon” to slow the pace of interest rate hikes.

“Overall, the minutes make it clear that FOMC members are determined to raise the policy rate further amid a very tight labor market and unacceptably high inflation,” Barclays analysts said.

“However, the minutes also reveal an emerging divergence of views among members on the peak rate and uncertainty about the peak.”

The futures market suggests a 76% chance of a 50 basis point hike to 4.25%-4.5% at the December meeting, while most investors expect the US federal funds target rate to reach above 5% by next May.

US economic data on Wednesday showed jobless claims rose more than expected last week, while business activity contracted for a fifth straight month in November.

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In Japan, data on Thursday showed that manufacturing activity contracted in November at the fastest pace in two years.

Meanwhile, the number of COVID cases in China continued to rise, with the economic toll piling up due to mobility restrictions and lockdowns.

China’s cabinet on Wednesday flagged the possibility of an upcoming cut in banks’ required reserve ratio (RRR), pledging new stimulus measures to revive its COVID-hit economy.

The U.S. dollar failed to recoup overnight losses of 1% against a basket of currencies at 105.89 on Thursday.

Oil prices will test a key support level from September, which, if breached, could see oil fall to levels not seen before the end of 2021, suggesting that inflation may have started to ease.

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U.S. crude futures were down 0.2% at $77.79 a barrel, after falling more than 3% on Wednesday, as Group of Seven (G7) nations saw Russian oil prices above a ceiling. current market rate.

Brent oil futures fell by 0.15% to $85.26.

In the bond market, long-term US Treasuries rose overnight after the Fed minutes. The yield on the 10-year note fell to a whopping 79 basis points short of the two-year yield, an inversion of the curve on a scale not seen since the crash of 2000 and, above all, a signal investors were expecting. deep economic recession in the coming months.

US markets are closed on Thursday for Thanksgiving.

(Reporting by Stella Keough Editing by Tom Hogg)


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