Hopes of dovish Fed boost Asian stocks as grain leaps

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Gains in Hong Kong, Australia and South Korea push MSCI's index of Asia-Pacific shares outside Japan up, but Chinese stocks fall

Singapore — Asian stock markets climbed cautiously on Monday amid hopes that the Federal Reserve might sound less aggressive about rate hikes this week, while wheat prices leapt after Russia withdrew from a pact allowing Ukrainian grain to transit the Black Sea.

“Things had got too pessimistic,” said Jun Bei Liu a portfolio manager at Tribeca Investment Partners in Sydney, of the stocks rally. Recent drops in US tech giants perhaps signal enough bad news is already in the price, she added. Chicago wheat futures leapt more than 8% to a two-week high of $8.93 a bushel in early trade, before settling back to $8.78, after Russia's withdrawal from a deal to allow Ukrainian grain shipments to reach global buyers.Under the UN-backed deal, Turkish, Russian and Ukrainian officials co-ordinated the movement of ships. No ships moved on Sunday, but the UN said it had agreed with Ukraine and Turkey on a movement plan for 16 vessels on Monday.

China's factory activity unexpectedly fell in October, an official survey showed on Monday, helping knock the Shanghai composite 0.3% lower. Rates and Fed funds futures traders have now tempered initial optimism and see the funds rate hitting near 5% by May next year. The dollar has also paused a retreat.

 

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