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Stocks in Asia extended gains following a sharp rally on Wall Street after Federal Reserve Chair Jerome Powell signaled a slowdown in the pace of rate hikes.

The dollar fell further Thursday and Treasury yields stabilized after large declines on Powell’s comments.

Japanese equities rose, Australians shares headed for a seven-month high and US and Hong Kong futures climbed. Tech stocks led the best day in nearly three weeks for the S&P 500, which ended November at the highest level in two months. 

Sentiment in Asia got an extra boost from a softening in the stance of China’s top official in charge of the fight against Covid-19. Vice Premier Sun Chunlan said the country’s efforts to combat the virus are entering a new phase with the omicron variant weakening and more Chinese getting vaccinated.

Powell’s comments affirmed expectations the Federal Reserve will raise interest rates 50 basis points this month in a departure from a run of four 75 basis point hikes. Pricing in the swaps market indicates the Fed funds rate will peak below 5% in May. Prior to Powell’s comments, the market anticipated a peak above 5% occurring in June.

Equities were buoyed by Powell’s indication that the Fed would balance tackling inflation with supporting the economy, said Krishna Guha, head of central bank strategy for Evercore ISI.

“Most importantly for risk assets, Powell’s remarks embraced the return of some two-sided risk management. That is a big deal for equities and means an outsized move in stocks relative to the rates market is justified," he said.

Optimism for tech stocks boosted US-listed blue chips on Nasdaq Golden Dragon China Index, which includes internet giants Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Baidu Inc. The benchmark jumped 9.6% on Wednesday.

Traders also scoured several economic reports, with key gauges of US activity painting a mixed third-quarter picture. Job openings fell in October -- a hopeful sign for the Fed as it seeks to curb demand.

The figures precede Friday’s jobs report, which is currently forecast to show employers added 200,000 workers to payrolls in November. Economists are expecting the unemployment rate to hold at 3.7%, and for average hourly earnings to moderate.

Elsewhere in markets, oil held three days of gains on signals that China is softening its Covid Zero policy and data showed a steep drop in US inventories.

Gold edged higher in Asia -- following a 1% advance on Wednesday.

Key events this week:

  • S&P Global PMIs, Thursday
  • US construction spending, consumer income, initial jobless claims, ISM Manufacturing, Thursday
  • BOJ’s Haruhiko Kuroda speaks, Thursday
  • US unemployment, nonfarm payrolls, Friday
  • ECB’s Christine Lagarde speaks, Friday

Some of the main moves in markets:

Stocks

  • Futures on the S&P 500 rose 0.3% as of 9:27 a.m. Tokyo time. The S&P 500 climbed 3.1%
  • Nasdaq 100 futures rose 0.3%. The Nasdaq 100 climbed 4.6%
  • Hang Seng futures rose 2.1%
  • Japan’s Topix Index rose 0.6%
  • Australia’s S&P/ASX 200 Index rose 0.9%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro rose 0.2% to $1.0432
  • The Japanese yen rose 0.6% to 137.22 per dollar
  • The offshore yuan rose 0.3% to 7.0267 per dollar

Cryptocurrencies

  • Bitcoin rose 0.6% to $17,199.81
  • Ether fell 0.4% to $1,291.78

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 3.61%
  • Australia’s 10-year yield declined three basis points to 3.50%

Commodities

  • West Texas Intermediate crude fell 0.2% to $80.37 a barrel
  • Spot gold rose 0.5% to $1,776.84 an ounce

This story has been published from a wire agency feed without modifications to the text.

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