Stocks surge in Asia on hopes Fed will pause rate hikes

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MSCI’s broadest index of Asia-Pacific shares outside Japan heads for biggest one-day percentage gain since early January

Singapore — Asian stocks jumped on Friday on increasing expectations that the Federal Reserve might stand still on rates and after the US Senate passed legislation lifting the government's $31.4-trillion debt ceiling, avoiding a catastrophic default.

The Senate voted 63-36 to approve the bill that was passed on Wednesday by the House of Representatives, as legislators raced against the clock to avert what would have been a first-ever default. The treasury department had warned it would be unable to pay all its bills on June 5 if Congress failed to act.

Markets are now pricing in a 20% chance of the central bank hiking by 25 basis points compared to a 50% chance a week earlier, according to the CME FedWatch tool. The spotlight will be on the labour department’s closely watched unemployment report for May, due later on Friday. The data will help determine whether the Fed sticks with its aggressive rate hikes.

Australia’s S&P/ASX 200 index rose 0.42%, while Japan’s Nikkei was 1% higher, continuing its hot run.

 

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