The meeting between Chinese President Xi Jinping and his US counterpart Joe Biden scheduled for today is also being closely watched for a potential thawing of tensions
2′ reading
Stock indexes and currencies tracked by Asian stock markets rose after an unexpected slowdown in inflation strengthened bets on the end of the cycle of aggressive rate hikes by the US Federal Reserve. MSCI Inc.’s Asia-Pacific index rose about 2%, with all markets in positive territory. U.S. stock futures also rose versus the S&P 500 Index’s highest since April. South Korea’s won led gains among Asian currencies. The offshore yuan strengthened to its highest since August.
Traders are now preparing for what could be a fundamental shift in the investment landscape. Fed swaps indicate that the chances of another hike have fallen to near zero, with the market expecting a 50 basis point rate cut by July. Fed officials welcomed the latest data showing falling inflation, while adding that there was still a long way to go before reaching the central bank’s 2% target.
“The fact that the US Fed seems to be done with rates and that inflation is now behind us is definitely a positive for all risk assets,” Pooja Malik, partner and head of portfolio management at Nipun Capital, told Bloomberg Television . “However, the situation may remain volatile over the next 12 to 18 months.”
Liquidity injection by the Chinese Central Bank
Sentiment was further supported by China’s central bank’s decision to inject the largest amount of liquidity into the banking system since 2016 in a bid to boost growth by keeping the policy lending rate at one year. The latest economic report highlighted a mixed recovery in China, with retail sales beating estimates but the contraction in real estate investment worsening.
Also the meeting between Chinese President Xi Jinping and his US counterpart Joe Biden (video) scheduled for today is being monitored closely for a potential thawing of tensions.
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2023-11-15 07:41:15
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