Asian Equity markets Rise on Hopes of Fewer Fed Rate Hikes

Asian Equity markets displayed noteworthy advancements on the back of a substantial upswing in Wall Street. Mainly driven by expectations that the era of pronounced interest rate hikes may be reaching its culmination.

The Hang Seng Index in Hong Kong exhibited a robust gain of 1.2%. Reaching a level of 17,296.34, while the Shanghai Composite Index registered a modest uptick of 0.1%, settling at 3,026.32. Tokyo’s financial markets remained shuttered due to a public holiday.

In the People’s Republic of China, a comprehensive assessment of the services sector demonstrated a marginal improvement for the month of October. Although the retail sales metric reached its lowest point in the past ten months. Analogous surveys for the manufacturing sector, released earlier during the week, indicated a prevailing trend of subdued market conditions.

The S&P/ASX 200 in Australia surged by a significant 1.2%. Reaching a level of 6,978.40, while South Korea’s Kospi index displayed a robust 1% increase, attaining 2,367.53. The Sensex in India experienced an uptick of 0.8%, and Bangkok’s SET index rose by 0.6%.

In parallel with Asian Equity markets: Global Markets React to the Federal Reserve’s Rate Hike Decision

With the Asian Equity markets, Market sentiment was buoyed by the prospect that the Federal Reserve may have brought its sequence of interest rate hikes to a close. As it elected to maintain its benchmark rate at its current level. This development reverberated positively across global equity markets on Thursday.

The Federal Reserve had been diligently enforcing rate hikes since the outset of the previous year in an endeavor to temper economic expansion and mitigate the impact of mounting inflationary pressures.

On Wall Street, the S&P 500 index soared by a notable 1.9% on Thursday. Concluding the session at 4,317.78 points, marking its fourth consecutive day of gains. For the week, the index has already gained 4.9%. Positioning itself for its most robust weekly performance in almost a year.

The Dow Jones Industrial Average recorded a significant 1.7% gain. In which closing at 33,838.08, while the Nasdaq composite surged by 1.8%, reaching a level of 13,294.19 points.

Yield Decrease and Economic Developments in the U.S. Market

In parallel with Asian Equity markets, Longer-term Treasury yields exhibited a decrement. With the 10-year Treasury yield receding to 4.66% on Friday, down from 4.67%, and notably lower compared to levels observed last week when it reached its highest point since 2007.

Lower yields have a stimulative effect on financial markets. Facilitating borrowing for both businesses and households, encouraging investors to allocate higher valuations to equities. Also alleviating systemic financial pressures.

However, Federal Reserve Chair Jerome Powell cautioned in the aftermath of the policy announcement on Wednesday that a substantial decline in the 10-year yield, potentially rekindling inflationary pressures, might necessitate a resumption of rate hikes by the central bank.

A preliminary report on Thursday indicated that U.S. businesses had heightened their productivity during the summer. Achieving higher output with a limited increase in labor hours, which could potentially mitigate inflationary pressures while fostering economic expansion.

Also Read: Asian Stocks Slide Ahead of Policy-Heavy Week

A separate report suggested that a slightly elevated number of U.S. workers applied for unemployment benefits in the prior week. Exceeding expectations. Although this development bears negative implications for the affected workforce, it could contribute to abating inflationary pressures by cooling the labor market.

Prominent U.S. corporations continued to surpass analysts’ projections, with Eli Lilly’s stock advancing by 4.7% following the company’s disclosure of robust sales for its leading diabetes treatment, Mounjaro, widely prescribed for weight management. Starbucks also made significant strides, surging by 9.5% after reporting stronger profit and revenue figures for the latest quarter, exceeding Wall Street’s forecasts.

Cedar Fair and Six Flags Merger Sparks Stock Movement

On Thursday, Cedar Fair and Six Flags unveiled their merger plans. Which aiming to create an expansive amusement park operator with a presence spanning 17 U.S. states and three countries. Although the performance of their respective stocks exhibited some variations. As both entities retained gains of more than 7% for the week, buoyed by speculations of the merger.

Conversely, Moderna experienced a 6.5% decline after disclosing a significantly greater loss for the latest quarter than what analysts had anticipated.

Wall Street may encounter further fluctuations. As the latest monthly update on the U.S. labor market, anticipated later on Friday, is expected to reveal a deceleration in hiring during the month of October.

Stability in Oil Prices and Currency Exchange Rates impact on Asian Equity markets

Oil prices demonstrated stability after experiencing considerable volatility throughout the week. A barrel of benchmark U.S. crude oil gained 18 cents, reaching $82.68 in electronic trading on the New York Mercantile Exchange. Following a gain of 90 cents to settle at $81.34 per barrel on Thursday. Brent crude, the international standard, registered an uptick of 15 cents, attaining $87.00 per barrel.

In currency trading, the U.S. dollar displayed a depreciation, receding to 150.31 Japanese yen from 150.44 yen. While the euro appreciated to $1.0627, up from $1.0620 late on Thursday.

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Disclaimer:

Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.