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TOKYO (Reuters) – Most Asia-Pacific stock markets rose on Thursday amid receding bets for a U.S. rate hike this month and relief over the passage through the U.S. House of Representatives of a bill to suspend the federal debt ceiling.
A surprise swing to growth for Chinese factory activity also provided in lift to sentiment, in a rare recent positive sign for the country’s post-pandemic recovery. Crude oil prices clawed back from four-week lows.
The dollar dipped to a one-week low versus 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 edged up from nearly two-week nadirs.
MSCI’s broadest index of Asia-Pacific shares gained 0.82%, rebounding after touching the lowest level since March 22 in the previous session.
Japan’s Nikkei added 0.77%, while Hong Kong’s Hang Seng gained 1.07% and mainland Chinese blue chips advanced 0.71%.
U.S. S&P 500 e-Mini futures were 0.12% higher.
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 (OTC:NABZY).
“What this does is it turns the attention to the incoming data and the Fed meeting this month,” Attrill added.
Money markets currently lay about 38% odds for a hike from the Fed 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.
More closely watched employment data is due this week, with the ADP survey out later in the data, followed by the monthly non-farm payrolls report on Friday.
“It’s been a fairly strong retracement in terms of the market’s expectations for the June meeting, and it’s come contrary to the data,” said Tony Sycamore, a market analyst at IG Markets.
“I suspect they would like to go on hold, but I’m not convinced,” he said. “I think the odds are closer to 50/50.”
The dollar slipped to the lowest since May 25 at 138.96 yen early in the Asian session, but rebounded to by 0.24% stronget at 139.655 approaching the European morning.
The euro eased 0.08% to $1.06785, moving back toward Wednesday’s low at $1.0635, a level last see on March 20.
Benchmark 10-year U.S. Treasury yields edged up to 3.6733% in Tokyo, after dipping to 3.6140% overnight for the first time since May 18.
Brent crude futures for August delivery rose 35 cents, or 0.48% to $72.95 a barrel, while U.S. West Texas Intermediate crude (WTI) added 27 cents, or 0.4%, to $68.36 a barrel.
