On track for first daily gain in six, follows Wall Street’s reaction to Fed

  • Asia-Pacific shares remain firm as Wall Street tracked downbeat Treasury yields after Fed’s 75 bp rate hike.
  • MSCI’s gauge of equity rises for the first time in six days.
  • Mixed Aussie jobs report test Aussie bulls, pre-BOE speculator, light calendar add to the trading filters.

Asian markets post the biggest daily gains in over a week during early Thursday as Fed’s 75 basis points (bps) rate hike appears a one-time affair. The regional equities also cheered downbeat Treasury yields and an absence of major negatives from the macro front. However, the speculative mood ahead of the Bank of England’s (BOE) monetary policy meeting and a speech from Fed Chair Jerome Powell seems to poke the bulls.

That said, the MSCI’s index of Asia-Pacific shares ex-Japan snaps a five-day downtrend with a 0.30% daily gain while Japan’s Nikkei 225 rose 1.15% by the press time.

The stocks in Australia and New Zealand (NZ) fail to portray the bull’s dominance amid downbeat NZ Q1 GDP and mixed Aussie employment numbers. Australia’s ASX has further negatives to consider as China looks for a centrally-controlled iron ore seller. Further, shares in China and South Korea were also positive, like in Japan, as technology companies reaped the benefits of the post-Fed bond buying.

Elsewhere, India and Indonesia are on the same line while posting mild gains as markets cheer post-Fed declines in the US Treasury yields.

On a broader front, the US 10-year Treasury yields rebound from an intraday low of 3.288% to 3.364% by the press time. Even so, the benchmark bond coupons remain negative for the second consecutive day, down 3.1 basis points (bps) at the latest. Additionally, the S&P 500 Futures track Wall Street’s gains with a 0.54% intraday run-up to 3,813 by the press time.

It’s worth noting that the US Federal Reserve (Fed) announced the biggest interest rate hike since 1994 to battle inflation fears. The US central bank also revised up inflation forecasts for this year and the next while cutting down the inflation expectations. Further, the policymakers also signaled either a 50 bp or 75 bp rate hike in the next meeting. However, the Fed’s rejection of the odds of a 100 bp rate increase and Chairman Jerome Powell’s measured comments seem to have drowned the Treasury yields and the US dollar afterward.

Moving on, the Bank of England’s (BOE) monetary policy, the second-tier housing and activity data from the US and risk catalysts may entertain equity traders ahead of Friday’s speech from Fed Chair Jerome Powell.

Also read: S&P 500 Futures stay firmer even as US Treasury yields struggle to keep post-Fed losses


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