Asian shares jump as investors eye end to Fed hikes, China stimulus

HONG KONG  – Asian shares bounced and the safe-haven dollar edged lower on Tuesday as investors hoped this week’s U.S. inflation data supports an imminent end to rate hikes and cheered the prospect China will deliver economic stimulus to prop up stalling growth.

Markets are awaiting U.S. inflation data due Wednesday to see if price pressures are continuing to moderate, which could provide clues on the interest rate outlook.

Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7 percent while U.S. stock futures, the S&P 500 e-minis, rose 0.06 percent.

Investors were digesting comments from several Federal Reserve officials on Monday who said while additional rate hikes are needed to bring down inflation, the end to the central bank’s current monetary policy tightening cycle is getting close.

Fed leaves rates unchanged, sees two small hikes by end of 2023

“U.S. CPI will be coming into focus, with the associated event risk potentially adding to the vibe,” ANZ analysts said in a note.

Australian shares edged up 1.01 percent, while Japan’s Nikkei stock index rose 0.66 percent.

China’s blue-chip CSI300 index was 0.4 percent higher in early trade. Hong Kong’s Hang Seng index opened up 1.03 percent.

Data showing a steeper-than-expected decline in Chinese producer prices on Monday suggests the country’s “post-COVID rebound has run out of steam” but added to expectations that “policy makers may need to do more to shore up demand,” said ANZ analysts.

China’s factory gate prices tall at fastest pace in 7 years

On Monday, U.S. stocks ended higher following last week’s losses while Fed officials’ comments bolstered the view that the U.S. central bank may be near the end of its tightening cycle.

On Wall Street, the Dow Jones Industrial Average rose 0.62 percent, the S&P 500 gained 0.24percent and the Nasdaq Composite added 0.18. percent

Shares of Intel rose 2.8 percent and an index of semiconductors was up 2.1 percent.

S&P 500 company earnings are due to kick off this week with reports from some big U.S. banks. Analysts expect earnings to have fallen 6.4 percent in the second quarter year-on-year, IBES data from Refinitiv showed.

In U.S. Treasuries, the yield on benchmark 10-year Treasury notes reached 4.0018 percent compared with its U.S. close of 4.006 percent on Monday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.8639 percent compared with a U.S. close of 4.862 percent.

The Fed comments knocked the greenback to a two-month low of 101.88 against a basket of currencies in early Asia trade, as investors pared expectations of how much further U.S. interest rates have to rise.

The Japanese yen rose to a near one-month high of 141.15 per dollar on Tuesday and last bought 141.43 per dollar, drawing support from a slump in U.S. Treasury yields.

U.S. crude ticked up 0.55 percent to $73.39 a barrel. Brent crude rose to $78.04 per barrel.

Gold was slightly higher. Spot gold was traded at $1925.63 per ounce.