Asian shares rally as markets wager on Fed pivot; US inflation in focus
Asian shares rose on Thursday as markets wagered that U.S. rates have peaked after more dovish remarks from Federal Reserve officials, while traders awaited the U.S. consumer inflation report later in the day for further monetary policy clues.
MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.7% to the highest level in three weeks. Tokyo's Nikkei rallied 1.3% for a third straight day, climbing away from its five-month low hit last week.
Hong Kong's Hang Seng index jumped 1.8%, driven by a 3% surge in banking shares after Central Huijin Investment, China's state fund, raised stakes in the big four banks.
China's blue chips rose 0.7%.
Overnight, Wall Street closed higher after Federal Reserve minutes showed a growing sense of uncertainty around the path of the U.S. economy, with volatile data and tightening financial markets posing risks to growth and leading policymakers to extend a rate pause last month.
The recent buoyancy in sentiment also owe much to comments from more Fed officials suggesting rates there may have peaked, which triggered a welcoming pullback in Treasury yields.
U.S. Fed Governor Christopher Waller on Wednesday said higher market interest rates may help the Fed slow inflation, and let it «watch and see» if its own policy rate needs to rise again or not.
Waller has been among the most vocal advocates for higher interest rates to fight inflation, and his comments added weight to similar statements this week by Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan.
The dollar settled near a two-week low, but the yen is still under pressure at 149.09 per dollar, just a whisker away from the 150 level that could spur intervention from Japanese authorities.
