November 21, 2023 (MLN): Asian investors on Tuesday built on a Wall Street rally as analysts said a strong US Treasury auction indicated confidence on trading floors that the Federal Reserve is finished hiking interest rates, as APP reported.
Expectations that financial conditions will become easier in the new year as inflation comes down have fanned a rush back into risk assets in recent weeks and pushed the dollar down against its peers.
All three main indexes in New York extended their gains Monday, with the Nasdaq hitting a 22-month high thanks to an advance in tech giants including Amazon, Microsoft and Nvidia.
The gains were boosted by the successful sale of 20-year US Treasuries that sent yields on other notes lower. Talk is now growing that the Fed could cut borrowing costs as early as March, much earlier than previous bets on the second half of 2024.
"Some professional investors have turned broadly bullish on bonds amid softer US macro data and speculation that the Fed's not only done raising rates but perhaps poised to implement so-called 'insurance cuts' beginning as soon as March," said SPI Asset Management's Stephen Innes.
Hong Kong led the way in Asia, putting on more than 1%, having jumped almost 2% Monday.
Market heavyweight Alibaba jumped more than 3% to extend its rebound after diving 10% Friday on news it had cancelled the spinoff of its cloud computing arm.
Shanghai, Sydney, Seoul, Taipei and Manila were also up, though Tokyo struggled owing to a strengthening yen.
The yen has bounced after coming within a whisker of the 32-year low of 151.95 to the dollar in October as US rate expectations ease and speculation swirls that the Bank of Japan is considering shifting from its ultra-loose policies.
The greenback was also down against the euro and pound.
Still, while traders are getting comfortable with a rate cut in the new year, Fed officials remain cautious.
In the latest remarks, Richmond Fed president Thomas Barkin warned the bank still had plenty of work to do to slay inflation, which at 3.2% is still well above target.
"The economy is still growing, unemployment is still 3.9% and inflation does seem to be settling. So all that's good," he told Fox Business.
"But the job's not done, so you have to keep on until you get the job done, and we'll see where we land."
He added that with "inflation being stubborn", he favoured keeping rates elevated for an extended period, but how long would depend on the incoming data.
Copyright Mettis Link News
Posted on: 2023-11-21T09:24:23+05:00
