Key Points:
- Investors turn more bullish on China on reopening prospects
- Fed hawks deliver warnings again of higher interest rates
Asian equities rose, with shares in Hong Kong leading gains as investors grew more optimistic about a further easing in China’s Covid restrictions
Stocks edged higher in Japan, Australia as well as South Korea, suggesting little reaction to news that North Korea had launched a missile.
Treasury yields held gains across the curve during morning trading in Asia after the previous day’s jump when St. Louis Fed President James Bullard said policymakers should increase interest rates to at least 5% to 5.25% to curb inflation. He also warned of further financial stress ahead. Bond yields in Australia and New Zealand followed suit.
The dollar slipped after rallying on Thursday. Oil was poised for a weekly loss as concerns over a worsening demand outlook filtered through the crude market.
On Thursday, fresh data showing weekly jobless claims came in below the forecast further underscored the strength of the labor market. US mortgage rates posting their biggest weekly decline since 1981 briefly improved sentiment, even though Freddie Mac’s chief economist said there’s a long road ahead for the housing market.
In Japan, inflation hit its fastest clip in 40 years in October. The outcome puts the Bank of Japan in an even more awkward position as it tries to explain the need to stick with monetary stimulus to pursue stable price growth.