Asian stocks advance before US Fed policy meeting
1 min read . Updated: 14 Dec 2022, 10:31 AM IST
PremiumStocks in Asia followed equities on Wall Street higher after US inflation cooled ahead of the Federal Reserve’s policy decision later Wednesday
Stocks in Asia followed equities on Wall Street higher after US inflation cooled ahead of the Federal Reserve’s policy decision later Wednesday.
Shares in Hong Kong, Japan, South Korea and Australia rose, along with US equity futures, in a sign of increase appetite for riskier assets. Mainland China shares fluctuated.
Still, the moves in Asia’s key country indexes were confined toi around 1%, reflecting a degree of caution that was also seen in the S&P 500 closing below its session highs. Investors are awaiting more hints on the Fed’s path from the decision later Wednesday and Chair Jerome Powell’s briefing.
A dollar gauge traded flat after Tuesday’s decline to the lowest level since June while emerging-market currencies strengthened versus the greenback. The New Zealand dollar fell in a decline that accelerated after the government warned a recession was likely next year.
Australian bonds were higher, led by the rate-sensitive three-year maturity. In the US Tuesday, Treasuries rallied after Powell’s key measure of services prices excluding energy and rents moderated again in November. While price pressures appear to have peaked, headline CPI remains above 7%, suggesting the Fed has more work to do to rein in inflation.
“The market is now anticipating a slower pace of hikes and a moderation of the peak terminal rate in the US," said Kellie Wood, deputy head of fixed-income at Schroders in Sydney. “We believe the market is fully priced for this interest rate cycle given the level of inflation in the US economy."
A dovish repricing swept across rates markets on Tuesday. With a half-percentage point move by the Fed notched in, wagers leaned toward a quarter-point increase as early as February. Further out, swaps priced the peak Fed policy rate around 4.85% by May, down from almost 5% ahead of Tuesday’s inflation print. The current Fed policy range is 3.75% to 4%.
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Following the Fed, the European Central Bank will announce its rate decision Thursday. Markets will also contend with decisions from the Bank of England and monetary authorities in Mexico, Norway, the Philippines, Switzerland and Taiwan.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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