Most Asian markets expect rate hikes but fear of China overshadows

However, the bright start to the week was overshadowed by plunges in Hong Kong and Shanghai after Xi Jinping was given a third term as leader and launched a zero-Covid strategic support team that caused his economic losses.

The yen fluctuated against the dollar as speculation swirled that Japanese authorities have entered the foreign exchange market once again to support their currency for the second time in as many sessions.

Tokyo, Sydney, Seoul and Taipei led gains after a strong performance in New York, ignited by a report that the Fed could start to step away from the pedal in its rate hike campaign.

The Wall Street Journal article said some officials want to discuss the slowdown when they meet next month.

Markets have been hit this year on fears that moves by the Fed and other central banks to combat decades-high inflation will spark a recession.

Officials were expected to raise the rate by 75 basis points for the fourth time in a row next month, while bets are growing on another such move in December.

“The mere suggestion of a Fed cut from 75 basis points to a 50 basis point increase in interest rates in December created a wild rally in the US stock market, reversing part of the recent rise. here’s the US Treasury yields and the smart swing of the US dollar,” said National Australia Bank’s Ray Attrill.

However, while most stock markets in the region have performed well, the Chinese market is being hit by a reshuffle at the highest level of the government. Hong Kong fell more than 4% and Shanghai nearly 1%.

-Zero-Covid worries-

At the weekend, Mr. Xi was awarded a third five-year leadership term, handing out key positions to loyalists who advocated the strategy of fighting the Covid outbreak with lockdown measures and other measures. other strict laws.

The policy has been blamed for the sharp decline in the world’s number two economy, and while data showed Monday that it expanded more than expected in the third quarter, traders remained in the dark. compete.

In the currency market, the yen is hovering around $149, having strengthened to 145.65 previously amid authorities saying authorities intervened to support the currency for the second time. in multiple sessions.

Observers said officials may have stepped in on Friday after the dollar surged to a 32-year high of 151.93 yen. That comes after a warning from the Treasury Department that it was monitoring the movements and following a similar move last month.

Matt Simpson at City Index said: “While (the Treasury Department) declined to comment on whether it would intervene, such action would not have occurred without numerous warnings from officials.

“The Treasury last week said it would deal with ‘rigorous’ speculators and Friday’s strong price reaction shows it did just that.

“Price action was also erratic during Monday’s Asian session, which suggests another possible intervention.”

The pound rose after former British prime minister Boris Johnson said he would no longer run for leader of the Conservative Party, following the resignation of Liz Truss last week.

His decision makes former finance minister Rishi Sunak the favorite to take power and become the country’s third prime minister this year.

The less-controversial Sunak’s choice could offer some stability in Westminster after weeks of turmoil caused by Truss’s small debt-laden budget sent the pound shaking and sent shivers through markets.

– Key figures at around 02:30 GMT –

Tokyo – Nikkei 225: UP 1.0% at 27,156.95 (closed)

Hong Kong – Hang Seng Index: 4.4% down at 15,497.13

Shanghai – Aggregate: 0.9 percent down at 3,010.37

Pound/dollar: UP at $1.1318 from $1.1258 on Friday

Dollar/yen: UP to 148.92 yen from 147.65 yen

Euro/dollar: DOWN at $0.9840 from $0.9863

Euro/pound: OFF 86.93 pence from 87.26 pence

West Texas Intermediate: FLAT at $85.05 per barrel

North Sea Brent Crude: FLAT at $93.47 per barrel

New York – Dow: Up 2.5% at 31,082.56 (closed)

London – FTSE 100: UP 0.4% at 6,969.73 (closed)

dan / cwl


This story has been published from the electronic agency’s feed with no modifications to the text.

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