This shift in sentiment left the dollar wallowing in one-month lows, with the euro hitting its highest level since April 25.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 1.5% in early trading, the biggest gain in a week, supported by a 1.2% rebound in stocks resource-rich Australian stocks, a 2.8% jump in Hong Kong equities and a 0.7% rise in mainland China blue chip stocks.
The Japanese Nikkei rose 1.0%.
The Hang Seng tech index opened 4.5% higher as first-quarter earnings from tech gloves Alibaba and Baidu beat forecasts.
The United States will not prevent China from developing its economy, but wants it to adhere to international rules, Secretary of State Antony Blinken said Thursday in remarks that did not surprise investors and political analysts. .
The stock market closed sharply higher overnight after an upbeat outlook for earnings in the retail sector and easing concerns about overly aggressive interest rate hikes from the Fed encouraged buyers .
The Dow Jones Industrial Average rose 1.61%, the S&P 500 1.99% and the Nasdaq Composite 2.68%.
Upbeat forecasts from retailers such as department store operator Macy’s Inc, discount chains Dollar General Corp and Dollar Tree appeared to offset dour warnings from peers in recent weeks.
“Despite the fact that the five-day gains on Wall St, which are now reaching and exceeding 4%, suggest that the collapse has been halted, it should not be misunderstood that this is just a a relief in earnings – and that this should not prematurely inspire proclamations of a restarting bull market,” analysts at Mizuho Bank said.
Tapas Strickland, director of economics and markets at NAB, said “stocks are in the glow of Wednesday’s FOMC minutes, where it appears markets have interpreted it as opening up the possibility of a pause by the Fed in the fourth quarter of 2022, while some note that the obligation to raise rates early in the period may have tightened financial conditions sufficiently.
The Fed’s May meeting minutes released Wednesday confirmed two more hikes of 50 basis points each in June and July, but policymakers also hinted at the possibility of a pause later in the year.
Yet the rally in equities has not trickled down to other asset markets, with returns broadly flat, Strickland noted.
On Friday, the yield on the benchmark 10-year Treasury bond rose slightly to 2.7649% from its US close of 2.758% on Thursday. It had hit a three-year high of 3.2030% earlier this month on fears that rapid Fed hikes could undermine long-term growth.
The two-year yield, which rises on traders’ expectations of a hike in federal funds rates, touched 2.4879%, versus a US close of 2.488%.
“Meanwhile, the fall in US Treasury yields has been correlated with lower inflation forecasts, which had been above 3% for the 10-year, and are now in the 2.6% zone. , a pronounced bond decompression,” ING analysts said in a note.
Signs that aggressive Fed action may already be slowing economic growth are also emerging. Thursday’s data showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week as the labor market remained tight. A separate report confirmed that the US economy contracted in the first quarter.
In the currency market, the US dollar fell 0.2% against a basket of major currencies, moving further away from its 20-year highs reached two weeks ago. The euro gained 0.26% against the greenback. [FRX/]
Oil prices eased slightly in early Asian trading after surging to a two-month high in the previous session as investors focused on signs of tight global supply.
US crude fell 0.15% to $113.92 a barrel. Brent crude oil fell 0.1% to $117.27 a barrel.
Gold was down slightly. Spot gold traded at $1848.79 per ounce. [GOL/]