asia: Asian stocks rise as relief rally builds after UK U-turn

Asian stocks rose on Tuesday as the dramatic reversal in UK fiscal policy lifted investor sentiment, while the US dollar took a breather at its lowest in more than a week as a rebound in risk appetite reduced its appeal.

Britain’s new Treasury Secretary Jeremy Hunt has abandoned most of Prime Minister Liz Truss’ economic plan, which had resulted in a political maelstrom fueled by market turmoil, with the pound hitting record lows in recent weeks and the Bank of England forced to intervene .

Analysts at Morgan Stanley said the fiscal reversal is likely to have a significant impact on the BoE as their economists now revise their call for a 75 basis point rate hike from 100 basis points for the November meeting.

Hunt’s move caused UK government bonds, currencies and stocks to soar, sending Wall Street soaring as well.

With such a sweeping scrapping of PM Truss’ Tory leadership promises, it remains an open question how long Truss will stay in power, said Tapas Strickland, head of Markets at National Australia Bank.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.43%, while Japan’s Nikkei rose 0.6%. S&P 500 futures and Nasdaq futures were both up 0.8%.

China’s stock market opened almost unchanged, up slightly 0.12% to 3,088.54 as the ruling Chinese Communist Party Congress, which is held twice every ten years, is still in session this week.

Chinese state banks are stepping up interventions to defend the flagging yuan, bank sources told Reuters on Monday, while many companies announced share buyback programs.

In the currency markets, the US dollar fell against most currencies overnight, with sterling dampened early Tuesday after gaining 1.6% in the previous session.

The Australian dollar rose on Tuesday after the Reserve Bank of Australia said it would hike interest rates further in the coming months.

The yen hit a fresh 32-year low of 149.10 per dollar on Monday, not far from the psychological metric of 150. Investors have been watching for signs of further intervention from the Bank of Japan, with authorities repeatedly predicting a determined one reaction warned that the yen would fall too quickly.

NAB’s Strickland said many point to 150 as a key threshold that the government is keen to avoid for political reasons.

Meanwhile, China has delayed the release of economic indicators, including the country’s third-quarter gross domestic product due Tuesday and trade data that were scheduled for last Friday.

Brent rose 0.08% to $91.69 a barrel, while US crude rose 0.04% to $85.49 a barrel.

https://economictimes.indiatimes.com/markets/stocks/news/asia-stocks-rise-as-relief-rally-builds-after-uk-u-turn/articleshow/94929160.cms asia: Asian stocks rise as relief rally builds after UK U-turn

Russell Falcon

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