Asian stocks rise to three-week high on optimism as dollar battles

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Investors bet on an eventual slowdown in US monetary tightening, albeit after sharp hikes

An employee passes share price information displayed on an electronic ticker board inside the London Stock Exchange Group’s offices in London, the UK. Picture: BLOOMBERG VIA GETTY IMAGES/LUKE MACGREGOR

The Memorial Day holiday in the US could make for a thin session ahead of the end of the month, but MSCI's broadest index of Asia-Pacific shares outside Japan still climbed 1.2% to a three-week high.Nasdaq futures added another 0.8%, after gaining 6.8% last week, while S&P 500 futures firmed 0.5%, having rallied 6.6% last week in their best week so far this year.

Just the chance of a less hawkish Fed was enough to see Treasuries rebound, with 10-year note yields just above a six-week low at 2.74%. That is down from a peak of 3.203% on May 9. “A sharp slowing in the US economy — if not matched by similar weakness in Europe — could result in a meaningful euro rebound, though the reverse is also true if US data hold up better than expected,” Pandl added. “We see downside risks to US growth, and have recommended USD/JPY put options to express this view.”

The euro was holding firm at $1.0746 on Monday, having risen 1.6% last week to as far as $1.0764. The dollar index stood at 101.50, after shedding 1.3% last week to hit a five-week low at 101.43.

 

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