Asian shares were mixed on Monday after modest gains on Wall Street, as investors remain optimistic that the Federal Reserve has come to the end of its interest rate hike cycle.
Following a number of reports pointing to a slowdown in inflation and a softening of the jobs market, traders are again turning to riskier assets as they bet on an easing of financial conditions in the new year, with many Also keeping an eye on rate cuts.
The focus this week will be on the Fed’s release of minutes from its November policy meeting, where officials discussed borrowing costs and signaled they may be finished with their tightening campaign.
“While the Fed is pleased with the emerging data, the minutes from the meeting will be scrutinized in the context of easier financial conditions and a more favorable macro environment supporting the soft landing narrative,” said Stephen Innes of SPI Asset Management.
All three major indexes on Wall Street closed with slight gains on Friday, while observers said they expected to see light trading this week over the Thanksgiving holiday.
There were fluctuations in Asian markets in early trading.
Tokyo moved slightly lower at the break, hitting a 33-year high briefly in the morning, while Hong Kong rose after heavy losses on Friday led by a 10 percent decline in ecommerce titan Alibaba.
On Monday, market leading stocks rose by more than one percent.
Sydney, Seoul, Jakarta and Wellington also rose, but Shanghai, Singapore, Taipei and Manila fell.
However, Marty Dropkin of Fidelity International cautioned that this path may not be completely risk-free.
“The risk…is that with yields falling and equities rising, financial conditions are loosening,” he said in a note.
“If this continues to the extent that the Fed becomes volatile, potentially causing some upside surprises in the inflation print, the Fed could resume its hawkish rhetoric, leading to increased volatility. This would probably lead to the next There is a story for the year, and in that a short-term year-end rally in equities looks credible.”
Expectations that interest rates will drop rather than rise weighed on the dollar, which was struggling to recover from last week’s losses.
And crude oil prices rose, rising more than four percent on Friday ahead of a meeting of OPEC and other major producers where Russia and Saudi Arabia may extend production cuts.
– Key figures around 0230 GMT –
TOKYO – Nikkei 225: down 0.1 percent at 33,562.41 (break)
Hong Kong – Hang Seng index: up 1.1 percent at 17,638.34
SHANGHAI – COMPOSITE: down 0.2 percent at 3,047.28
Dollar/yen: declined to 149.53 yen from 149.64 yen on Friday
EUR/USD: Drops to $1.0910 from $1.0916
Pound/Dollar: Up from $1.2465 to $1.2470
Euro/pound: down from 87.55 pence to 87.50 pence
West Texas Intermediate: UP 0.3 percent to $76.25 a barrel
Brent North Sea crude: up 0.3 percent at $ 80.83 per barrel
New York – Dow: Flat at 34,947.28 (Close)
LONDON – FTSE 100: up 1.3 percent at 7,504.25 (close)