Asian stocks strengthen but futures show bounce could be short lived

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HONG KONG – Asian stocks rose on Wednesday as investors grew on hopes that future global interest rate hikes could become less aggressive amid early signs that earlier policy tightening was working to moderate price pressures in some of the world’s leading economies.

The broadest index of Asia-Pacific shares outside Japan rose 2.3 percent, after U.S. shares ended the previous session with gains. The index has risen by 1.4% so far this month.

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Australian shares rose 1.66%, while Japan’s Nikkei index rose 0.39%.

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Hong Kong’s Hang Seng index gained 5.38%, boosted by a 7% rise in technology shares. Markets in mainland China remain closed for holidays.

Investors are closely awaiting a crucial OPEC+ supply decision later on Wednesday, which could have global implications for already high energy prices and inflation.

After making big gains the previous day, US crude fell 0.35% to $86.22 a barrel, while Brent crude fell 0.29% to $91.58 a barrel .

OPEC+, which includes Russia and Saudi Arabia, could cut 1-2 million barrels a day, according to a Reuters report earlier Wednesday.

The positive tone for Asian equities on Wednesday could prove short-lived, however.

In early European trade, pan-regional Euro Stoxx 50 futures were down 0.32% at 3,467, German DAX futures were down 0.41% at 12,631, FTSE futures were down 0.33 % to 7,071.

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US stock futures, the S&P 500 e-minis, were down 0.44% at 3,786.5.

The Dow Jones and S&P 500 posted their biggest two-day gains in two years on Tuesday as fears of aggressive rate hikes eased.

Positive sentiment was fueled after U.S. job postings fell to the most in nearly 2 1/2 years in August, a sign that the Federal Reserve’s mission to rein in demand by raising rates was working.

“Investors have started to bid because central banks could start to slow the pace of rate hikes and that is compatible with risk appetite,” Clara Cheong, global strategist at JPMorgan Asset Management, told Reuters.

“To me, it looks like a bear market rally that anything that could still be sustainable. For it to sustain, we need to see headline and core inflation come down and not just for a month or two, we need to see a trend of this”.

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The US consumer price index for September will be released on October 13.

The strong performance in Australian shares is the first two-day gain since September 13 and follows the stock market’s best day in more than two years on Tuesday after the Reserve Bank of Australia ordered an interest rate hike 25 basis points lower than expected. .

In a sign that some central banks are still worried about inflation, New Zealand raised its rates by 50 basis points on Wednesday, as expected, but said it had considered a 75 basis point increase.

“This is a rounding of the oversold market because there has been a stabilization in the 10-year Treasuries, the US dollar has started to strengthen and that has created this positive sentiment in the stock market,” said Jack Siu, Chief Investment Officer for Greater China at Credit Suisse. .

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“It’s going to be one of those bounces you see that won’t be sustained in a volatile market.” The yield on the benchmark 10-year Treasury note rose to 3.6232 percent compared with the U.S. close of 3.617 percent on Tuesday.

The two-year yield, which is rising on traders’ expectations of a Fed funds rate hike, touched 4.0799 percent compared with a U.S. close of 4.097 percent.

The dollar fell slightly against the yen to 144.05. .

The euro fell 0.1% on the day to $0.9971, after gaining 1.76% in a month, while the dollar index, which tracks the greenback against a basket of currencies from other major trading partners, was slightly positive in the Asian afternoon session after trading in the red earlier.

Gold was slightly lower. Spot gold traded at $1,719.8876 an ounce.

(Reporting by Scott Murdoch in Hong Kong; Editing by Sam Holmes and Simon Cameron-Moore)