Hong Kong (Reuters): Wednesday, Asian stocks went up because investors saw signs that future global interest rate hikes might not be as big a deal. Price pressures in some of the world’s biggest economies were being tamed by the tightening of policies in the past.
After U.S. stocks ended the previous session with gains, MSCI’s broadest index of Asia-Pacific shares outside of Japan was up 2.3%. So far this month, the index is up 1.4%.
The Nikkei stock index in Japan went up 0.39 percent, while Australian shares went up 1.66 percent.
The 7% rise in tech stocks helped the Hang Seng Index in Hong Kong go up by 5.38 points. The markets in mainland China are still closed for the holidays.
Related: After the BOE steps in, Asian stocks go up, but the pound rally loses steam.
Investors are waiting with bated breath for OPEC+ to make a very important supply decision later on Wednesday. This decision could have global effects on already high energy prices and inflation.
After making big gains the day before, U.S. crude fell 0.35 percent to $86.22 per barrel, and Brent crude fell 0.29 percent to $91.58 per barrel. [O/R]
A report from Reuters on Wednesday morning said that OPEC+, which includes Russia and Saudi Arabia, could cut between 1 million and 2 million barrels a day.
Wednesday was a good day for Asian stock markets, but that might not last.
Early on in Europe, the Euro Stoxx 50 futures were down 0.32 percent to 3,467, the German DAX futures were down 0.41 percent to 12,631, and the FTSE futures were down 0.33 percent to 7,071.
The S&P 500 e-minis, which are futures on U.S. stocks, were down 0.4% at 3,786.5.
Tuesday was the first day in two years that the Dow Jones and S&P 500 had their biggest two-day gains. This was because fears of aggressive rate hikes started to go away.
The good mood was boosted by the fact that the number of U.S. job openings dropped by the most in almost 2.5 years in August. This was a sign that the Federal Reserve’s plan to slow down demand by raising interest rates was working.
“Investors have started to price in the idea that central banks might start to slow the rate of rate hikes, which is good for risk appetite,” said Clara Cheong, a global strategist at JPMorgan (NYSE:JPM) Asset Management.
“I think it looks more like a rally in a falling market than something that could last for a long time. “For it to stay in place, we need to see that both headline inflation and core inflation are going down, and not just for a month or two, but over a longer period of time.”
On October 13, the U.S. Consumer Price Index for September will be made public.
Australian stocks have done well for two days in a row for the first time since September 13. This comes after the stock market had its best day in more than two years on Tuesday, when the Reserve Bank of Australia decided to raise interest rates by 25 basis points less than expected.
As expected, New Zealand raised its rates by 50 basis points on Wednesday, which shows that some central banks are still worried about inflation. The country also said it had thought about a 75 basis point increase.
“This is an oversold market because the ten-year treasuries have stabilised and the US dollar has started to stabilise,” said Jack Siu, the Greater China chief investment officer for Credit Suisse.
“In a volatile market, it’s going to be one of those bounces that won’t last.”
On Wednesday, the yield on benchmark 10-year Treasury notes went up from Tuesday’s U.S. close of 3.617% to 3.6232%.
The two-year yield hit 4.0799%, which was higher than the U.S. closing rate of 4.097%. The yield goes up when traders think the Fed Funds rate will go up.
Related: Asian Stocks Continue to Lose as Fears of a Recession and Rate Risks Continue to linger
At 144.05., the dollar was worth a little less than the yen.
The euro fell 0.1% on the day to $0.9971, but it has gained 1.76% in the past month. In the Asian afternoon session, the dollar index, which measures the greenback against a basket of currencies of other major trading partners, was slightly up after trading in the red earlier.
Gold went down a little bit. One ounce of spot gold was worth $1,719.8876. [GOL/]
