Hong Kong (AFP) – Stocks rose Friday and government yields held their losses after comments from top Federal Reserve officials tempered fears that the central bank would hike interest rates at its meeting this month. However, traders remain on edge and oil prices ticked higher again as the United States and Iran exchanged fire following a flare-up in their six-month-long conflict last weekend.
Markets have been shaken this week as the Middle East crisis sent crude surging around 10 percent, fanning inflation concerns and putting pressure on central banks to raise interest rates. That turn sent the cost of government debt to multi-decade highs, with analysts also pointing to a surge in corporate borrowing to fund AI investment and concerns about government finances. The panic eased slightly after US President Donald Trump indicated the latest bombing campaign against Iran would be short-lived, but comments from New York Fed boss John Williams and governor Christopher Waller provided the most relief.
Waller said Thursday that his call for the September 16 policy move would be guided by incoming data and that a softer reading would edge him towards holding rates. “My decision on the appropriate stance of policy will be heavily influenced by what we learn about August inflation,” Waller said. “If there is continued progress toward our two percent goal, then I am willing to support holding the policy rate at its current level. But if inflation comes in hot, I would consider a rate hike.”
That came after Williams told CNBC earlier in the week that policymakers needed to “wait and see.” “There’s no clear signs right now whether monetary policy currently is sufficient to make sure we bring inflation back to target in the next year or two, or whether we would need to see further action to do that,” he said. “The (inflation) data recently have been encouraging towards that,” he added. “I am actually seeing the trend in inflation moving slowly down as some of the effects of the tariffs move into the rearview mirror.”
The comments come as investors prepare for the release of US non-farm payrolls figures later Friday and the consumer price index next week, which are seen as crucial to what the Fed announces. Fed chief Kevin Warsh, who is usually reticent to give guidance, had stunned markets Friday when he appeared to suggest the bank was prepared to hike.
All three main indexes on Wall Street ended well up, with the Dow and Nasdaq adding more than one percent. In Asia, Hong Kong climbed more than two percent, while Seoul gained more than one percent. Tokyo, Shanghai, Singapore, Wellington, Jakarta, and Taipei were also well up.
The yen maintained its gains enjoyed over the previous two days amid growing expectations for a Bank of Japan interest rate hike this month, and a suggestion from an official that another could be on the way at the next meeting. The sharp move higher against the dollar had also sparked talks of an intervention following a historic joint US-Japan move in July. The currency was sitting at around 155.90 per dollar Friday, having been wallowing around 160.40 Tuesday.
“It appears the BoJ will pull the trigger and hike in September but then open the door to a potential pick up in the pace of hiking,” Paresh Upadhyaya at Pioneer Investments said. “We are finally seeing a follow through to intervention by some meaningful expectation on the policy front.”
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: UP 0.9 percent at 64,769.74 (break)
Hong Kong – Hang Seng Index: UP 2.2 percent at 25,765.02
Shanghai – Composite: UP 0.8 percent at 3,974.99
Dollar/yen: UP at 155.90 yen from 155.74 yen on Thursday
Euro/dollar: UP at $1.1630 from $1.1628
Pound/dollar: UP at $1.3534 from $1.3527
Euro/pound: DOWN at 85.93 pence from 85.96 pence
West Texas Intermediate: UP 0.7 percent at $91.91 per barrel
Brent North Sea Crude: UP 0.5 percent at $95.98 per barrel
New York – Dow: UP 1.2 percent at 53,686.11 (close)
London – FTSE 100: UP 0.7 percent at 10,831.51 (close)
© 2024 AFP
