Asian shares rally from 11-month lows as US bond yields retreat
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Japan’s Nikkei index climbed 1.8 per cent as investors scooped up beaten-down shares.
PHOTO: REUTERS
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SYDNEY – Asian shares rebounded from 11-month lows on Thursday as a plunge in oil prices and softer US labour data helped pull US government bond yields off 16-year peaks, although a looming US jobs report could make or break the rally.
Tracking overnight gains on Wall Street, MSCI’s broadest index of Asia-Pacific shares outside Japan rebounded 0.9 per cent. Japan’s Nikkei climbed 1.8 per cent as investors scooped up beaten-down shares.
Hong Kong’s Hang Seng index advanced 0.4 per cent. China’s mainland markets remained closed for holidays.
Singapore’s Straits Times Index was up 0.5 per cent as at 1.44pm, after sliding 1.4 per cent on Wednesday.
Overnight, the rout in Treasuries took a breather after a cooler-than-expected United States private payroll report and a 5 per cent drop in oil prices offered some comfort to investors. Risk sentiment has taken a beating on the view that interest rates will stay high for longer.
Ten-year Treasury yields eased two basis points to 4.7123 per cent, off 16 basis points from a fresh 16-year high of 4.884 per cent hit overnight.
Much will depend on US non-farm payroll data on Friday. Economists expect 170,000 jobs created in September, slowing from 187,000 in August, while the jobless rate likely ticked lower to 3.7 per cent from 3.8 per cent.
“I think those numbers will have to be a long way from those expectations for it to move the dial for the Fed, but numbers close to the expectations might serve to calm jitters in the Treasury market,” said Mr Stephen Miller, an investment strategist at GSFM, a Sydney-based fund.
“Given where Treasury yields are at the moment, I think the risks are pretty evenly balanced between them on the downside and on the upside.”
The recent spike in yields has meant they have reached levels where, if sustained, would see a significant tightening in financial conditions, bolstering the case for no further hikes by the US Federal Reserve. The CME FedTool now prices in a 23 per cent chance of a hike in November, compared with 28 per cent a day ago.
The US dollar came off its highs and Wall Street rebounded, led by the tech-heavy Nasdaq, which rose more than 1 per cent overnight.
The battered yen also got a much-needed reprieve, rallying 0.4 per cent on Thursday to 148.52 per US dollar. Traders are continuing to wonder whether a sharp rebound away from the 150 level on Tuesday was due to intervention from the Japanese authorities.
Despite the renewed strength for the US dollar, analysts still see weakness for it ahead, a Reuters poll showed.
Oil prices gained on Thursday after losing a colossal 5 per cent to where they were at the beginning of 2023. Brent crude futures rose 0.7 per cent to US$86.39 per barrel and US West Texas Intermediate crude futures were up 0.6 per cent at US$84.69.
The price of gold gained 0.3 per cent to US$1,827.38 an ounce. REUTERS
