GLOBAL MARKETS-Asia shares jump as investors anticipate smaller interest rate rises

By Ankur Banerjee

SINGAPORE, Oct 27 (Reuters) – Asian shares rose on Thursday on growing expectations that major central banks may start to slow the pace of interest rate hikes in coming months, while the dollar’s retreat lifted commodities and pushed Treasury yields lower.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 1.59% and was poised for a third straight session of gains. The index is about 2% lower for the month.

Australia’s resource-heavy share index advanced 0.81%, while Japan’s Nikkei opened 0.09% lower.

China’s stock market opened 0.1% higher on Friday, with Hong Kong’s Hang Seng index up 2.6%.

China’s stocks had a turbulent week, headlined by Monday’s brutal sell-off as global investors dumped Chinese assets, worried that President Xi Jinping’s new leadership team would put ideology ahead of the economy.

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But a growing expectation among investors that the Federal Reserve along with other central banks could halt their aggressive rate hike policy helped calm investor despair and blunted the dollar’s rally.

“Yields are generally lower globally as the earlier run-up in expectations for central bank tightening is reduced a bit further,” said Taylor Nugent, a market economist at National Australia Bank in Sydney.

Nugent also noted that the Bank of Canada announced a smaller-than-expected 50 percentage point rate hike on Wednesday, saying it fueled expectations that the Fed would begin the move to a similarly sized rate hike in December.

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US Treasury yields fell, helped by a weaker dollar and expectations of the Fed becoming less hawkish.

Meanwhile, earnings reports from Facebook parent Meta Platforms Inc and Samsung Electronics Co Ltd on Wednesday fueled fears of a downturn after some of Europe’s biggest banks also warned of growing risks as the economy sours.

In currency markets, the euro rose above $1 for the first time in five weeks, hitting a high of $1.00935, as investors awaited a rate decision from the European Central Bank (ECB), with markets expecting that will deliver a rate hike of 75 bp. .

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Sterling traded at $1.1624, down 0.03% on the day after coming off a session high of $1.1645.

The yen strengthened 0.18% against the dollar at 146.09 per dollar.

The drop in the dollar also helped push gold prices higher, with spot gold scaling a two-week high on Wednesday.

Oil prices continued to rise in early Asian trade on Thursday after rising more than 3% in the previous session.

Brent crude futures were up 25 cents, or 0.3%, at $95.94 a barrel by 0015 GMT. US West Texas Intermediate (WTI) crude rose 19 cents, or 0.2%, to $88.10.

(Reporting by Ankur Banerjee; Editing by Simon Cameron-Moore)

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