Business Maverick: Asian stocks climb after CPI, dollar extends loss: markets wrap

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Asian equities and US stock futures advanced in the wake of a shock rebound in US stocks that roared back from losses sparked by a hot inflation reading. That triggered a broader risk rally that also saw currencies gain against the greenback.

An index of the region’s equities extended gains and was poised to snap a five-day losing streak. The S&P 500 defied expectations to rally 2.6% after consumer price data cemented bets for the Federal Reserve to deliver another jumbo rate hike in November.

Cryptocurrencies also got a boost from the improved risk appetite in global markets, lifting Bitcoin to a one-week high and putting the largest token on the cusp of retaking the $20,000 level. Technical levels factored into the bounce. At one point, the benchmark S&P 500 had given back 50% of its post-pandemic rally, triggering programmed buying. A wave of put options bought to protect against such a rout moved into the money, and as profits were booked, that prompted dealers to buy stocks to remain market neutral.back-to-back 75 basis-point hikes at the next two Fed meetings and expect the central bank to push rates past 4.85% before the tightening cycle ends.

One of the biggest challenges for investors in Asia is the ongoing strength in the dollar, according to Isaac Poole, chief investment officer at Oreana Financial Services. “Inflation print makes it more likely the global reserve remains elevated in the near term,” he said. “It is not time to be adding lots of risk, but also not time to be dialling risk back massively.”

 

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