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Asian Shares Climb On Fed Pivot Hopes

asian mixed2 11nov22 lt

Asian stocks soared on Friday, as China cut quarantine restrictions for inbound travelers and flights and softer-than-expected U.S. inflation data fueled hopes the Federal Reserve will ease up on its interest rate increases in the coming months.

China's Shanghai Composite index surged 1.7 percent to 3,087.29 as health authorities announced shortening of the quarantine period for residents and inbound travelers. Authorities also scrapped a penalty on airlines that bring in infected passengers.

Investors shrugged off data showing that new bank lending in China fell more than expected in October from the previous month.

Hong Kong's Hang Seng Index skyrocketed 7.7 percent to 17,325.66, while the Chinese yuan marked its strongest levels in more than a month.

Japanese shares hit a two-month high, with tech and other growth stocks leading the surge. The Nikkei 225 Index jumped 3.0 percent to 28,263.57, marking its highest close since September 13 and logging a third straight weekly gain. The broader Topix gained 2.1 percent to settle at 1,977.76.

Chip equipment maker Tokyo Electron soared 8.4 percent despite the company downgrading its full-year earnings forecast.

Peer Advantest spiked 9.1 percent and Screen Holdings added 7.8 percent, while heavyweight SoftBank Group closed 1.8 percent higher ahead of its earnings release later in the day. Camera maker Nikon slumped 8.9 percent after posting a lower half-year net profit.

Japanese producer prices rose for the 20th consecutive month in October, but price growth moderated due to easing global inflation, data showed earlier in the day.

Seoul stocks rose the most in 19 months on hopes for less aggressive Fed rate hikes due to slowing U.S. inflation. The Kospi rallied 3.4 percent to 2,483.16, marking the largest daily gain since the 3.5 percent surge on February 25, 2021.

Tech heavyweights Samsung Electronics and SK Hynix gained 4.1 percent and 4.9 percent, respectively. Internet portal operator Naver jumped 9.9 percent and chemical giant LG Chem advanced 6 percent.

Australian markets posted strong gains, with miners benefiting the most on hopes that China will eventually ease its zero-COVID policy.

The benchmark S&P/ASX 200 Index advanced 2.8 percent to 7,158, while the broader All Ordinaries Index ended 2.9 percent higher at 7,350.10. BHP, Rio Tinto and Fortescue Metals Group surged 4-6 percent.

Tech stocks also rallied, with Afterpay owner Block and Zip spiking 11.5 percent and 18.4 percent respectively.

Across the Tasman, New Zealand's S&P/NZX-50 Index jumped 2.0 percent to 11,311.76. Investors shrugged off data showing that activity in the country's manufacturing sector contracted in October for the first time since August 2021.

U.S. stocks rose the most in more than two and a half years overnight, the dollar tumbled and the yield on the two-year Treasury note saw its biggest drop since October 2008, as tamer than expected inflation data raised hopes of Fed easing and a soft landing for the economy.

U.S. consumer inflation rose 0.4 percent in October, pushing the annual increase below 8 percent for the first time in eight months, data showed.

The Dow jumped 3.7 percent to reach its best closing level in almost three months and the S&P 500 soared 5.5 percent to hit a two-month closing high, while the tech-heavy Nasdaq Composite skyrocketed 7.4 percent.

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