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Asia stocks edge up despite global growth worries

12/07/2022 | 09:33pm EST
FILE PHOTO: A giant display of stock indexes in Shanghai

SINGAPORE (Reuters) - Asian equities edged higher on Thursday, propped up by Hong Kong and China stocks even as growing fears of an economic slowdown and worries over the pace of the Federal Reserve's interest rate hikes weighed on sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.19%, set to snap a two-day losing streak. China's stock market was 0.12% higher, with Hong Kong's Hang Seng Index surging nearly 2%.

The gains in Chinese shares came after some investors booked profits on Wednesday after the government announced sweeping changes to ease a tough anti-COVID policy that has battered the world's second-largest economy.

Elsewhere in Asia, Australia's S&P/ASX 200 index lost 0.67%, while Japan's Nikkei fell to near one-month low.

The market generally struggled for direction as traders digested data showing that U.S. worker productivity rebounded at a slightly faster pace than initially thought in the third quarter, but the trend remained weak, keeping labour costs elevated.

Increasing fears that the U.S. central bank might stick to a longer rate-hike cycle in the wake of strong jobs and service-sector reports has crimped investors' risk appetite.

Also weighing on the equities market was U.S. Treasury yields, with five-year notes to 30-year bonds hovering at three-month lows.

"The thing that stands out is what's going on U.S. Treasury market, there does not seem to be a lot behind the moves and I think that's what driving most of the rest of the market," said Rob Carnell, head of ING's Asia-Pacific research.

"Ahead of the FOMC next week, we may see range trading a little bit."

Wall Street closed lower on Wednesday, with the benchmark S&P 500 declining for the fifth straight session, while the tech-heavy Nasdaq finished lower for the fourth day in a row.

Many in the market believe inflation is moderating and bond yields have peaked, allowing central banks to begin slowing rate hikes when policy-makers from the Fed, the Bank of England and the European Central Bank meet next week.

The Fed is widely expected to raise interest rates by 50 basis points next week after delivering four consecutive 75 bps hikes.

The Bank of Canada on Wednesday hinted that its historic tightening campaign was near an end as it raised benchmark overnight interest rates by 50 basis points to 4.25%, the highest level in almost 15 years.

Meanwhile, the yield on 10-year Treasury notes was up 4.3 basis points (bps) to 3.451%, while the yield on the 30-year Treasury bond was up 3.4 bps to 3.448%. Yields on both notes touched three month lows on Wednesday.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 3.9 bps at 4.296%.

In the currency market, the dollar index rose 0.171%, with the euro down 0.05% to $1.05, while sterling was last trading at $1.2184, down 0.12% on the day.

Oil prices steadied in early Asian trade on Thursday after sinking to their lowest level this year.

U.S. crude rose 0.96% to $72.70 per barrel and Brent was at $77.79, up 0.8% on the day.

(Editing by Kim Coghill)

ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.10% 0.6415 Delayed Quote.1.90%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.14% 0.69258 Delayed Quote.3.81%
BRENT OIL 0.15% 80.11 Delayed Quote.-4.54%
BRITISH POUND / EURO (GBP/EUR) 0.10% 1.11694 Delayed Quote.-0.83%
BRITISH POUND / US DOLLAR (GBP/USD) 0.13% 1.20595 Delayed Quote.1.04%
CANADIAN DOLLAR / EURO (CAD/EUR) -0.07% 0.691142 Delayed Quote.-0.16%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.03% 0.7457 Delayed Quote.1.68%
DOW JONES FXCM DOLLAR INDEX 0.93% 12808.36 Real-time Quote.-0.28%
EURO / US DOLLAR (EUR/USD) 0.06% 1.07958 Delayed Quote.1.89%
INDIAN RUPEE / EURO (INR/EUR) 0.37% 0.011273 Delayed Quote.-1.08%
INDIAN RUPEE / US DOLLAR (INR/USD) 0.30% 0.012168 Delayed Quote.0.82%
MSCI SINGAPORE (GDTR) 0.17% 5937.02 Real-time Quote.6.58%
NASDAQ COMPOSITE -1.59% 12006.95 Real-time Quote.14.72%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) 0.02% 0.63265 Delayed Quote.1.98%
NIKKEI 225 0.39% 27509.46 Real-time Quote.5.42%
S&P/ASX 200 -0.19% 7543.8 Real-time Quote.7.38%
US DOLLAR / CANADIAN DOLLAR (USD/CAD) -0.02% 1.3402 Delayed Quote.-1.65%
US DOLLAR / EURO (USD/EUR) -0.06% 0.926286 Delayed Quote.-1.86%
WTI 0.04% 73.743 Delayed Quote.-5.67%
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