© Reuters. FILE PHOTO: A man uses a mobile phone as he takes a photo of the electronic board displaying share prices during a trading session at the Pakistan Stock Exchange, in Karachi, Pakistan November 28, 2023. REUTERS/Akhtar Soomro
By Stella Qiu
SYDNEY (Reuters) – Asian shares are on the rise, tracking Wall Street higher on Wednesday as U.S. rate cut fever lingers. Additionally, oil held on to gains from the past two days after Houthi militants’ attacks on ships in the Red Sea disrupted maritime trade.
The yen is nursing losses near a one-week trough, and Japanese yields extended declines after the Bank of Japan held policy steady and gave no sign of when it might end negative interest rates. This further aided risk appetite.
Europe is set to open higher, with EUROSTOXX 50 futures up 0.3% and gaining 0.3%. and Nasdaq futures were both up 0.1%.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8% to a fresh four-month peak, helped by a gain of 1.1% in Hong Kong stocks and a jump of 1.6% in South Korea.
Chinese shares were an outlier, with blue chips falling 0.5% after the central bank left unchanged it’s benchmark lending rates, as widely expected.
rose 1.7%, edging closer to a 33-year high. The yen was pinned at 143.66 to the dollar, after an overnight drop of 0.8% and benchmark ten-year yields fell another 7.5 basis points to 0.56%, the lowest since early August.
Overnight on Wall Street, the Dow Jones rose 0.7% for another all-time closing high, and the added 0.7% to reach its highest since January. The gained 0.6%.
The rally was fueled by an unexpectedly dovish tone from U.S. Federal Reserve Chair Jerome Powell last Wednesday on rate cut prospects next year, with the stock market having paid little attention to subsequent pushback by other Fed officials.
On Tuesday, Richmond Fed President Thomas Barkin welcomed the retreat in inflation but refrained from saying how that affected his policy outlook for next year. Atlanta Federal Reserve President Raphael Bostic said there was no urgency to cut rates.
Analysts at JPMorgan expect a more challenging macro backdrop for share markets next year as a recent disinflationary trend should become a major headwind for corporate margins, adding that they favor cash and bonds.
“It has become consensus that a recession will be avoided, while equity multiples appear rich, credit spreads are tight, and volatility is unusually low,” they told clients in a note.
“Thus, even in an optimistic scenario, we believe upside is limited for risky assets.”
On Tuesday, a BofA fund manager survey showed investors turned more bullish in December, buying stocks and cutting cash holdings. They had the biggest overweight position in bonds since 2009.
Falling yields also propped up equity valuations. Benchmark 10-year yields slipped 1 basis point to 3.9125%,
