Asian stocks took their cue on Friday from a late rally on Wall Street, as markets focused on a possible slowdown in the pace of rate hikes rather than a U.S. recession after data showed its economy shrinking for a second straight quarter.
"Financial markets have taken the combination of the ... announcement and ... the negative U.S. GDP print as confirmation that policymakers will ease off their aggressive monetary tightening cycle before too long. Our sense, however, is that such hopes are premature and that some of this year's dominant trends, notably the rise of the U.S. dollar, will reassert themselves before too long," Capital Economics said in a note.
The dollar stayed near a six-week low against the yen for similar reasons, trading at 134.39 yen , bouncing 0.13% after an overnight plunge of 1.74%, the most since March 2020. It touched a low of 134.2 on Thursday, the weakest since June 17.U.S. Treasuries slipped on the weak economic data, with the yield on benchmark 10-year Treasury notes retreating to 2.6759%. The two-year note's yield, which typically moves in step with interest-rate expectations, was at 2.8703%.
"There's this see-saw at the moment with inflation and growth concerns," said Tom Nash, fixed income portfolio manager at UBS Asset Management in Sydney, with surprisingly soft U.S. growth figures putting the focus on the latter. "When it's inflation concerns, yields are going up, when it's growth concerns yields are going down. What we're seeing at the moment is the market is putting less emphasis on inflation and more on growth."
Brent crude futures rose 0.8% to $108 a barrel and U.S. West Texas Intermediate crude was up 1.08% at $97.46.the state of play of Asian stock markets please click on:Additional reporting by Tom Westbrook; editing by Richard Pullin
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