Asian stocks rose mostly on Friday, led by a 5.8% rise in Hong Kong’s Hang Seng Index on speculation Beijing might start easing pandemic restrictions. As a result of Thursday’s holiday, the Nikkei fell, catching up after Japan’s markets were closed. The markets are watching for signs of a recovery in demand in China and weighing the risks of further inflation-fighting interest rate increases.
On Thursday, Wall Street’s benchmark S&P 500 lost 1.1% and the tech-heavy Nasdaq composite lost 1.7% after the Federal Reserve raised its benchmark rate for the sixth time this year. A closely watched U.S. jobs report is due out later Friday, reports the Associated Press. Chinese shares have risen over the past few days on hopes that COVID-19 controls may be loosened.
The world’s No. 2 economy would benefit from an alleviation of supply chain disruptions that have slowed economic activity. Stocks were weighed down by expectations of higher interest rates, which pushed up Treasury yields. Tradeweb reports that the two-year Treasury note rose to 4.72% from 4.61% late Wednesday, its highest level since 2007. As a result of rising rates, not only do stocks look less appealing than lower-risk assets such as bonds and CDs, but they also slow the economy by discouraging borrowing.
Inflation has been stubbornly high, causing central banks around the world to raise interest rates as well. The Bank of England raised interest rates for the first time in three decades on Thursday. It is the Bank of England’s eighth consecutive increase and its biggest since 1992. It was hoped that economic data would indicate that the Fed might avoid rate hikes that might slow the economy and bring on a downturn.
However, hotter-than-expected employment data this week indicate that the Fed will remain aggressive. Friday will see the release of the U.S. government’s October jobs report, which will give Wall Street a broader picture of the economy. Non-farm employers are expected to have added 200,000 jobs last month, according to the Labor Department. In December 2020, the economy lost 115,000 jobs, which was the most negative showing since then.
On the New York Mercantile Exchange, benchmark U.S. crude rose 67 cents to $88.84 a barrel in electronic trading Friday. In London, Brent crude gained 65 cents to $95.32 per barrel, the international standard. As a result of currency trading, the U.S. dollar dropped from 148.25 Japanese yen to 148.06 yen. Compared to 97.50 cents, the euro now costs 97.74 cents.