After Wall Street reversed losses on Friday, Asian equities increased on expectations of a strong economic recovery in China and hints of a moderate U.S. Federal Reserve policy tightening stance. Strong U.S. data from recent weeks, particularly overnight U.S. unemployment claims, have roiled global markets and signalled that the Fed will need to hike rates higher and for a longer period of time.
But after Atlanta Federal Reserve President Raphael Bostic indicated he preferred “slow and steady” quarter-point rises in U.S. rates to reduce risk to the economy, markets exhaled a sigh of relief. Investors are also keeping an eye on China’s annual parliamentary session, which begins on Sunday and is used to define economic goals and choose new top economic officials.A renewed thirst for risky assets has also been aided by early indications of a gradual recovery in China’s economy following the relaxation of restrictive restrictions in December.
The infrastructure and real estate industries will also receive help from the government, according to analysts at Commonwealth Bank of Australia in a note. Early trading saw a 0.5% increase in MSCI’s largest index of Asia-Pacific shares outside of Japan, putting it on pace to post its first weekly gain in five weeks. This month, the index has increased 1.6% so far. The S&P 500 e-minis, which represent U.S. stock futures, were down 0.07% at 3,982, but overnight regular trading for the major indexes was completed. Australian stocks increased by 0.36% thanks to increases in the mining and finance sectors, while Japan’s Nikkei stock index increased by 1.42%.
The dollar index, which measures the value of the dollar against a basket of other significant trading partners, was down at 104.86. The index is currently up more than 1% for the year, although it is still down from a peak reached in September of almost $114. Following an overnight increase to 137.10 yen, the highest level since December 20, the dollar declined 0.15% to 136.55 yen.
