Japan’s Nikkei index was up 1.23% to 26,817.24 in morning trade, its highest level since June 29.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.8% to its highest level in a week, and South Korea’s KOSPI index was up 1.18%. % and ready for its best week in five months.
The three main US indices rose overnight on positive signals from Federal Reserve officials. Governor Christopher Waller called recession fears “exaggerated”, while St Louis Fed President James Bullard said he saw a “good chance” of a soft landing for the economy .
Waller suggested the Fed would likely try to tackle inflation with an interest rate hike of 75 basis points in July and 50 basis points in September. He added, however, that “if inflation does not seem to be coming down, we will have to do more”, thus allowing for possible future increases of 25 basis points.
This has brought some relief to stock markets after recent sell-offs caused by fears that global central banks are pushing economies into recession to curb runaway inflation. The Asian regional benchmark is still down 16% since the start of the year.
The latest indicator of the health of the US economy is expected later today with the release of US non-farm payrolls data. The consensus expects 268,000 jobs to have been created in May.
“How the market will react to deviations from this expectation is debatable,” ING’s Robert Carnell and Iris Pang said in a client statement. “You could argue that a stronger number will mean the Fed has more work to do, and therefore increases the prospects for a harder landing. But sometimes the market reaction is more simplistic than you might imagine.”
The pound rose 0.22% to 1.20530 and is essentially back to where it was at the start of the week, after a few difficult days amid political turmoil in Britain.
“In our view, the pound should soon lose its gains given the outlook for a weaker UK economy,” said Carol Kong, currency strategist at Commonwealth Bank of Australia.
Oil prices were down in morning trading after rebounding overnight. Brent crude oil futures fell 34 cents to $104.33 a barrel, while US WTI crude oil fell 39 cents to $102.34.
US Treasury yields remained stable, with the benchmark 10-year bond yield standing at 2.9982% and the two-year bond yield at 3.0182%.
Bitcoin jumped 3.03% to $22,268.55, its highest price in more than three weeks. It is up nearly 15% this week, on track for its best week since early May.