Asian shares extended overnight global gains on Friday, thanks to strong results from regional tech firms and US retailers
Asian shares extended overnight global gains on Friday thanks to strong results from regional tech firms and US retailers, while investors also took comfort from the Federal Reserve’s minutes, suggesting it may extend its sharp rate hike later this year. can stop.
Volatility in sentiment left the dollar at a one-month low, with the euro hitting its highest level since April 25.
However, optimism is likely to fade when European markets open up. Pan-area Euro Stoxx 50 futures were flat, German DAX futures were down 0.02% while FTSE futures were down 0.34%.
Nasdaq futures and S&P500 futures both lost 0.1%.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.8%, its biggest gain in a week, buoyed by a 2.8% jump in Hong Kong shares as Chinese tech firms got a better-than-expected first-quarter boost. found. Alibaba and Baidu are expected to increase revenue, as well as stabilize Sino-US ties and more government incentives.
Japan’s Nikkei rose 0.6%, China’s blue-chips 0.6% and Australia’s resource-heavy index rose 1.1%.
The United States will not stop China from growing its economy, but wants it to comply with international rules, Secretary of State Antony Blinken said in remarks on Thursday that some investors interpreted positively for the bilateral relationship.
Wall Street closed sharply overnight after an optimistic retail earnings outlook and concerns about overly aggressive interest rate hikes by buyers encouraged by the Fed.
The Dow Jones Industrial Average gained 1.61%, the S&P 500 gained 1.99% and the Nasdaq Composite gained 2.68%.
Upbeat guidance from retailers such as department store operator Macy’s Inc., discount chain Dollar General Corp and Dollar Tree offset scary warnings from their peers in recent weeks.
“Despite the fact that the five-day gain of 4% and above now on Wall St. suggests that the bearish has halted, there should be no mistake that this earnings relief is; — and a premature one. Bull market reboot announcements should not prompt Mizuho Bank analysts.
“Equities are sitting in the guise of the FOMC minutes on Wednesday, where it appears markets have interpreted them as opening up to the possibility of a Fed break in Q4 2022,” said Tapas Strickland, director of economics and markets at NAB. Some note that the increased front-loading may have tightened financial conditions enough.”
Minutes of the Fed’s May meeting, released on Wednesday, confirmed two more 50-basis point hikes each in June and July, but policymakers also suggested the possibility of a pause later in the year.
Still, with bond yields largely stable, the lift in equities hasn’t spread to other asset markets, Strickland said.
The yield on the benchmark 10-year Treasury notes rose slightly to 2.7504% on Friday, compared to 2.7416% on Thursday. It hit a three-year high of 3.2030% earlier this month on fears that a bullish hike from the Fed could undermine long-term growth.
The two-year yield, which rises in line with traders’ expectations of higher fed funds rates, touched 2.4618%, compared to a close of 2.4678%.
“Meanwhile the fall in US Treasury yields is linked with a fall in inflation expectations, which were above 3% in 10yr, and are now in the 2.6% zone,” analysts said. Overall, a clear dissolution of tensions, Analysts said. In ing in a note.
In currency markets, the US dollar fell 0.2% against a basket of major currencies, dragging further from its 20-year peak two weeks ago. The euro rose 0.28% against the greenback. [FRX/]
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Oil prices hovered around a two-month high, with Brent crude on track for its biggest weekly jump in 1-1/2 months, fueled by EU sanctions on Russian oil and the coming summer in the United States. was supported by the prospect of a driving season of .
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