MSCI’s broader stock index in the Asia-Pacific region outside Japan rose 0.56% to 555.81. Hong Kong’s Hang Seng index rose 1.6%.
Japan’s Nikkei, however, fell 0.25%.
Trading was sluggish on Thursday, with Australia closed for a public holiday and parts of Asia, including China, still out for the Lunar New Year.
Traders betting that the Federal Bank of the United States will soon curb its aggressive policy of raising interest rates got a boost after the Bank of Canada on Wednesday became the first major central bank to say it probably won’t. will proceed to further increases for the time being.
After a series of steep rate hikes last year, the US central bank is expected to hike rates by 25 basis points next week in light of signs of slowing inflation.
“Today’s release of US GDP will be of key interest in assessing whether market expectations that are moving towards a soft landing rather than a recession can continue to hold,” Saxo strategists said in a note to clients.
The prospect of a less aggressive pace of monetary tightening has fueled expectations of a “soft landing”, a scenario in which inflation will ease against a backdrop of weak but resilient economic growth.
But so far, weak corporate earnings have reignited fears about the economic impact of the Fed’s tightening policy, and the S&P 500 fell overnight.
Boeing announced a major loss for 2022 on Wednesday, due to weakness in its defense unit, and warned of further problems with the supply chain. The American aircraft maker failed to meet Wall Street’s expectations in terms of revenue and earnings per share for the last quarter of the year.
Investor attention will also be drawn to next week’s meetings of the Bank of England and the European Central Bank, with traders looking for clues as to when central banks might become accommodative.
In the foreign exchange market, the dollar index, which measures the US currency against six major rivals, was 101.57, not far from the eight-month low of 101.51 it hit last week.
The Japanese yen strengthened 0.32% to 129.19 to the dollar, while the pound was trading at $1.2407, up 0.06% on the day.
The 10-year Treasury yield fell 1.7 basis points to 3.445%, while the 30-year Treasury yield fell 2.2 basis points to 3.602%.
A closely watched part of the US Treasury yield curve, which measures the spread between two-year and 10-year Treasury yields, considered a gauge of economic expectations, was -68.8 basis points. The inversion of this curve has predicted eight of the last nine recessions, according to analysts.
The yield on two-year US Treasuries, which generally moves in line with interest rate expectations, fell 0.6 basis points to 4.131%.
Oil prices rose as US crude inventories rose less than expected. West Texas Intermediate (WTI) crude rose 0.42% to $80.49 a barrel and Brent crude to $86.24, up 0.14% on the day. [O/R]
Gold prices hit a nine-month high on Thursday, with spot gold holding steady at $1,946.73 an ounce after hitting its highest level since April 2022.