(Bloomberg) – Most Asian stocks looked set to rise Thursday amid speculation that the Federal Reserve’s policy tightening would help fight inflation without derailing economic growth. The dollar fell and the Treasury yield curve steepened.
Futures surged for Japan and Australia, but Hong Kong slipped amid concerns over more US sanctions against Chinese companies. Tech stocks led US stocks to a strong close after initial declines following the Fed’s statement.
The central bank has said it will double the rate at which it cuts its bond purchases to $ 30 billion per month and expects interest rates to hike three quarters of a point in 2022, three more in 2023 and two more in 2023 and two more. more in 2024. She also pointed out the economic risks associated with the omicron virus strain.
The market reaction suggests some relief from greater political clarity after a period of uncertainty, and the belief that the pivot in ultra-flexible monetary parameters will not nullify the rally of a range of assets from the markets. pandemic troughs.
“If there is a story here, it’s that the Fed is moving forward but it will not do anything reckless to kill this market advance that we have had over the last year,” Jonathan Golub, chief US equity strategist at Credit. Switzerland Group AG, said on Bloomberg Television. “They are not looking to disrupt the type of environment that we have experienced and that is good news for the markets.”
The five-year break-even rate on inflation-protected Treasuries – or the difference between those yields and those on typical Treasuries – approached 2.8%. This suggests that the Fed still faces the challenge of bringing inflation back to its 2% target. Real yields slid further into negative territory.
“What you have left is that they might do a little bit, but they won’t do so much to prevent the Fed from supporting financial markets,” Jeffrey Rosenberg, senior portfolio manager for the systematic fixed. returned to BlackRock Inc., Bloomberg told television. “At least that’s the initial reading here.”
Elsewhere, shares of Chinese companies listed in the United States plunged Wednesday to their lowest since March 2020, fearing Washington would hit more companies with investment and export sanctions.
Among other assets, oil rose, as did commodity currencies. Bitcoin traded close to $ 49,000 after making modest gains.
On the virus front, omicron continues to spread globally. The UK has reported the highest number of new daily coronavirus cases since the start of the pandemic.
Here are some key events from this week:
- BOE rate decision, Thursday.
- ECB rate decision, Thursday.
- Housing starts in the United States, initial jobless claims, industrial production, Thursday.
- BOJ monetary policy decision, Friday.
- Quarterly rebalancing of S&P Dow Jones indices effective after market close on Friday.
- Quadruple witch day in the US market, when options and futures on indices and stocks expire on Friday.
For more market analysis, read our MLIV blog.
Some of the main movements in the markets:
- The S&P 500 rose 1.6%
- The Nasdaq 100 rose 2.4%
- Nikkei 225 futures rose 1.5%
- S & P / ASX 200 futures rose 0.6%
- Hang Seng futures fell 1.2%
- Bloomberg Dollar Spot index fell 0.2%
- The euro was trading at $ 1.1294
- The Japanese yen was at 114.06 per dollar
- The offshore yuan was at 6.3753 per dollar
- The yield on 10-year Treasuries rose two basis points to 1.46%
- Australian 10-year yield rose three basis points to 1.59%
- West Texas Intermediate crude rose 0.2% to $ 70.87 a barrel
- Gold was at $ 1,777.01 an ounce
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