Japan Financial Markets
A man walks by monitors showing Japan's Nikkei 225 index at a securities firm in Tokyo, Thursday, Nov. 24, 2022. Asian shares gained Thursday, although optimism about the Federal Reserve holding back on aggressive interest rate raises was countered by some uncertainty about coronavirus restrictions in China. (AP Photo/Hiro Komae)
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Asian shares rise on Fed rate hopes despite China worries

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By YURI KAGEYAMA

Asian shares gained Thursday, although optimism about the Federal Reserve holding back on aggressive interest rate raises was countered by some uncertainty about coronavirus restrictions in China.

Trading was relatively muted in Asia ahead of U.S. markets being closed for Thanksgiving. Benchmarks rose in Japan, Australia and South Korea. They rose in Hong Kong but fell in Shanghai. Oil prices fell.

“A headwind for Asian markets is the COVID situation in China, where investors seem to be avoiding local assets and commodities as the country is seeing near-record numbers of COVID cases. Broad restrictions will keep weighing on risk sentiment and macroeconomic fundamentals, putting pressure on the outlook for cyclical stocks and commodities,” Anderson Alves at ActivTrades said in a commentary.

Japan's benchmark Nikkei 225 jumped 1.0% to finish at 28,383.09. Australia's S&P/ASX 200 added 0.1% to 7,241.80. South Korea's Kospi gained nearly 1.0% to 2,441.33. Hong Kong's Hang Seng rose 0.6% to 17,626.00, while the Shanghai Composite fell 0.3% to 3,089.31.

Stocks closed broadly higher on Wall Street after minutes from the Federal Reserve's most recent policy meeting showed central bank officials agreed that smaller rate hikes would likely be appropriate “soon.”

That suggests policymakers are seeing signs that inflation may be cooling as the economy slows with more costly borrowing.

The S&P 500 rose 0.6% to 4,027.26, while the Dow Jones Industrial Average gained 0.3% to 34,194.06. The Nasdaq composite closed 1% higher to 11,285.32.

The Russell 2000 index of smaller companies edged higher, adding 0.2% to close at 1,863.52.

Long-term Treasury yields fell. The yield on the 10-year Treasury, which influences mortgage rates, slipped to 3.69% from 3.76%.

At their Nov. 1-2 meeting, Fed officials expressed uncertainty about how long it might take for their rate hikes to slow the economy enough to tame inflation. At a news conference afterward, Chair Jerome Powell stressed the Fed wasn't even close to declaring victory in its fight to curb high inflation. Other Fed officials in the weeks since the meeting have signaled that additional hikes are still necessary.

The central bank’s benchmark rate currently stands at 3.75% to 4%, up from close to zero in March. It has warned that it may have to ultimately raise rates to previously unanticipated levels to cool the hottest inflation in decades.

Wall Street has been closely watching the latest economic and inflation data for any signs that might allow the Fed to ease up on future rate increases. Investors are worried that the Fed could slam the brakes too hard on economic growth and bring on a recession.

Consumer spending and the employment market have so far remained strong points in the economy. That has helped as a bulwark against a recession, but also means the Fed may have to remain aggressive.

Technology stocks and some big retailers helped drive a big share of the gains in the benchmark S&P 500 index Wednesday. Chipmaker Nvidia rose 3% and Target rose 3.5%.

Homebuilders rose broadly following a government report showing that sales of new U.S. homes rose more than expected in October. Lennar gained 1.6% and D.R. Horton rose 2.2%.

In energy trading, benchmark U.S. crude lost 47 cents to $77.47 a barrel. Brent crude, the international standard, fell 66 cents to $84.75 a barrel.

In currency trading, the U.S. dollar fell to 138.87 Japanese yen from 139.57 yen. The euro cost $1.0435, up from $1.0399.

© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

©2022 GPlusMedia Inc.


3 Comments
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“A headwind for Asian markets is the COVID situation in China, where investors seem to be avoiding local assets and commodities as the country is seeing near-record numbers of COVID cases. Broad restrictions will keep weighing on risk sentiment and macroeconomic fundamentals, putting pressure on the outlook for cyclical stocks and commodities,” Anderson Alves at ActivTrades said in a commentary.

Difficult to be more explicit in the disqualification of the Chinese strategy, and the worst thing is that from the point of view of public health this is completely unnecessary.

Being optimistic this would be more than enough to dispel the appeal of the Chinese market on investors overseas, but being realistic some people will always ignore very real risks only looking at possible (but unlikely) huge gains in the future, in that part there are some parallels with how crypto is being treated.

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The only take away from all this is that China risks for investors and businesses alike are, on balance, negative and is a liability.

If they can't manage themselves, how do you expect to achieve positive returns on coupling to China (for supply or demand).

Word is the Apple factory issues are almost all covid related.

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Asian shares gained Thursday, although optimism about the Federal Reserve holding back on aggressive interest rate raises was countered by some uncertainty about coronavirus restrictions in China.

Amazing China is still able to control all the other Asian economies.

In the end, their government, based on advice from international health experts, has decided to save lives as opposed to countries like New Zealand and Australia, which incorporated zero covid strategies but gave up and saw rocketing death and infection rates from Covid. And those two countries listened to the WHO agency.

China's economy has been the only one to show positive economic growth throughout the Covid crisis, and in the end, will come out on top of all other Asian countries, which in addition to high Covid related death rates, also saw their economies stumble out of control.

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