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Asian stocks and US equity futures advanced Friday as investors assessed whether monetary tightening to tackle inflation in the US and Europe is getting closer to being priced in.
Equities rose in Japan and Australia in the wake of modest Wall Street gains that left the S&P 500 above 4,000 for the first time since late August. Shares in Hong Kong rebounded on short covering ahead of a long weekend in China.
Mainland stocks also climbed, with an unexpected moderation of consumer inflation in August giving policy makers in Beijing more room to support the economy.
The euro advanced to the highest level in more than a week after the European Central Bank raised rates 75 basis points Thursday. Bets the Federal Reserve will hike by the same margin when it meets later this month increased after chair Jerome Powell reiterated the Fed is determined to curb price pressures.
The yen headed for its best day in a month as traders mulled currency comments from the Bank of Japan Governor Haruhiko Kuroda.
Treasuries held their retreat overnight, leaving the policy-sensitive two-year yield near the highest since 2007. Australian and New Zealand bonds fell.
The Bloomberg Dollar Spot Index slipped but remained in sight of a record high. Oil rose toward US$84 a barrel and gold climbed.
Global stocks are on course for their first weekly advance in four, a small measure of respite from the bear-market omens circling markets due to monetary tightening, energy woes and China’s growth slowdown.
“The markets have finally digested the fact that rates are almost certain to go up by 75 basis points when the Fed moves next,” JoAnne Feeney, partner and portfolio manager for Advisors Capital Management, said on Bloomberg TV.
“What we are seeing though is some recognition that perhaps the sell-off that we saw in the second half of August was a bit overdone,” she said. – Bloomberg
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