Asia stocks rise on US rate-hike outlook and debt-ceiling progress

The dollar weakens as the Fed suggests a delay on rate increases, while crude oil rebounds on positive Chinese factory activity and news of an upcoming Opec+ meeting


Most Asia-Pacific stock markets rose on Thursday amid receding bets for a US rate hike this month and relief over the passage of the US debt-ceiling bill through the House of Representatives.

The dollar sagged to a one-week low vs the yen and hung close to Wednesday’s more-than-two-month trough to the euro after Federal Reserve officials including governor and vice-chair nominee Philip Jefferson pointed to a rate hike “skip” at the June 13-14 policy meeting.

Treasury yields rose slightly from nearly two-week lows.

Crude oil prices edged off four-week lows after a surprise swing back to growth in a private survey of Chinese factory activity, with an Opec+ meeting looming on the weekend.

MSCI’s broadest index of Asia-Pacific shares gained 0.45%, rebounding after touching the lowest level since March 22 in the previous session.

Japan’s Nikkei added 0.29%, while Hong Kong’s Hang Seng gained 0.5% and mainland Chinese blue chips advanced 0.53%.

A divided House passed a bill to suspend the $31.4-trillion debt ceiling — and avert a catastrophic default — with majority support from both Democrats and Republicans, stoking optimism that it can move through the Senate before the weekend.

“This has gone through with a very big majority, so there’s enough bipartisan support that it’s very hard to believe this isn’t going to be even more of a formality in the Senate,” said Ray Attrill, head of foreign-exchange strategy at National Australia Bank (NAB).

“What this does is it turns the attention to the incoming data and the Fed meeting this month,” Attrill added.

Money markets now lay about 38% odds for a hike on June 14, swinging back from about 70% earlier in the day, after some unexpectedly hot jobs numbers.

However, shortly after, the Fed’s Jefferson said skipping a rate hike in two weeks would provide policymakers time to see more data before making a decision. Philadelphia Fed President Patrick Harker also said on Wednesday that for now he is inclined to support a “skip” in rate hikes.

The dollar was little changed at 139.435 yen after slipping to the lowest since May 25 at 138.96 earlier in the session.

The euro was flat at $1.06905. It sank as low as $1.0635 on Wednesday for the first time since March 20.

Benchmark 10-year US treasury yields edged up to 3.6655% in Tokyo, after dipping to 3.6140% overnight for the first time since May 18.

Brent crude futures for August delivery rose 46c, or 0.63%, to $73.06 a barrel, while US West Texas Intermediate (WTI) added 40c, or 0.59%, to $68.49 a barrel.



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