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Trade of Asia

As the Fed minutes take centre stage, Asian stocks rise and the dollar fluctuates.

Hong Kong shares helped Asian stocks rise significantly on Wednesday, as the dollar fell. Investors were eagerly expecting the minutes from the Federal Reserve’s most recent meeting to determine the future course of interest rates.

A third straight day of advances for the year was expected for MSCI’s largest index of Asia-Pacific shares outside of Japan, which was up 1.3%. The index saw its worst year since 2008 in 2022, dropping 20%.

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The positive attitude in Europe was predicted to continue by futures, which showed the Eurostoxx 50 futures up 0.36%, German DAX futures up 0.36%, and FTSE futures up 0.27%. S&P 500 E-mini futures increased by 0.16%.

Later on Wednesday, the minutes from the Fed’s December meeting will be made public. At that meeting, the Fed warned that rates might need to stay higher for longer. Investors will analyse the minutes to determine whether further tightening of the monetary policy is probable.

Rob Carnell, head of ING’s Asia-Pacific research, said, “The market has had a rather tentative start to the year… (and) is still wrestling with the idea of what we will see from the Fed this year.”

“There are two groups, and they are battling it out for control of the viewpoint. The camp that performs better some days does better some days for a longer period of time “Carnell declared.

The minutes from the Fed’s December meeting will be made available later on Wednesday. The Fed issued a warning at that meeting that rates may need to remain higher for longer. Investors will review the minutes to decide whether further monetary policy tightening is likely.

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The market has had a shaky start to the year, according to Rob Carnell, head of ING’s Asia-Pacific research, and it’s still unclear what the Fed will do this year.

“Two factions are engaged in a conflict about who will dominate the worldview.” “The camp that does better occasionally does so more consistently over time,” Carroll announced.

According to Edward Moya, senior market analyst at Oanda in New York, “it is too early to start betting on a Fed pivot this year, and that should make this a difficult environment for stocks.”

In Asia, Australia’s heavily resource-dependent S&P/ASX 200 index increased 1.63%, while Japan’s Nikkei fell 1.12%.

In the wake of China abandoning its strict “zero-COVID” policy, Chinese stocks increased while Hong Kong’s Hang Seng Index rose to its highest level since July, as investors remained confident about a post-COVID rebound.

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In the currency market, the euro increased 0.18% to $1.0565 after falling overnight to a three-week low of $1.0519. German inflation unexpectedly slowed down, which boosted bunds and caused the euro currency to decline on Tuesday.

After increasing 1% over night, the dollar index, which compares the value of the dollar to six other currencies, decreased by 0.21%. After falling 0.7% overnight, the pound was last trading at $1.8191, up 0.13% on the day.

At 130.85 per dollar, the Japanese yen gained 0.12% against the dollar.

The 10-year Treasury note rate decreased by 6.4 basis points to 3.728%, while the 30-year Treasury bond yield decreased by 5.6 basis points to 3.835%.

The two-year U.S. Treasury yield, which ordinarily moves in lockstep with forecasts for interest rates, decreased 4.1 basis points to 4.364%.

Due to disappointing Chinese demand statistics, a bleak economic outlook, and a stronger U.S. currency, oil prices stabilised on Wednesday after plummeting 4.1% on Tuesday, the worst daily drop in more than three months.

U.S. crude prices decreased 0.3% to $76.70 per barrel, while Brent prices decreased 0.18% to $81.95.

At $1,844.84 per ounce, spot gold increased by 0.3%. American gold futures increased by 0.32% to $1,845.60 per ounce.

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