# Stocks rally wobbles as Fed hike draws near
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-10-31
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Asian Stocks Rise as US Fed Rate Hike Fears Ease
Meta Description: Asian stock markets fluctuate as worries grow over U.S. Fed's rate hike plans, Japan's Nikkei rises 1.5%, wheat jumps amid Russia-Ukraine grain
URL: https://financedigest.com/stocks-rally-wobbles-as-fed-hike-draws-nearhtml

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By Tom Westbrook

SINGAPORE (Reuters) – Asian stock markets wobbled higher on Monday as hopes waned that the U.S. Federal Reserve might take a less aggressive approach on [rate hikes](https://www.financedigest.com/stocks-falter-as-economic-worries-nag-nz-delivers-big-rate-hike.html "Stocks falter as economic worries nag, NZ delivers big rate hike"), while wheat leapt on Russia’s withdrawal from a pact allowing Ukrainian grain to transit the Black Sea.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1%, though China [stocks were held flat by disappointing economic data](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling"). The index is down ten months in a row and near two-year lows, rattled by growth and interest-rate [hike fears](https://www.financedigest.com/asian-shares-gain-as-fears-about-rapid-fed-hikes-bank-crisis-fade.html "Asian shares gain as fears about rapid Fed hikes, bank crisis fade").

Japan’s Nikkei rose 1.5% and is [set for its best month](https://www.financedigest.com/german-bonds-set-for-worst-month-in-decades-as-inflation-hits-new-highs.html "German bonds set for worst month in decades as inflation hits new highs") in nearly two years.

The mixed performance follows an erratic earnings season on Wall Street and [bond and currency markets tempering some wagers on a change in tone from the Fed](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause"). The dollar, after posting two weeks of losses, steadied on Monday and rose 0.5% on the yen.

Things had gotten too pessimistic,” said Jun Bei Liu a portfolio [manager at Tribeca Investment Partners](https://www.financedigest.com/exclusive-crypto-giant-binance-moved-400-million-from-u-s-partner-to-firm-managed-by-ceo-zhao.html "Exclusive-Crypto giant Binance moved 0 million from U.S. partner to firm managed by CEO Zhao") in Sydney, of recent gains. [Heavy drops](https://www.financedigest.com/analysis-twitters-massive-revenue-drop-adds-to-heavy-debt-burden.html "Analysis-Twitter’s ‘massive’ revenue drop adds to heavy debt burden") in U.S. tech giants perhaps signal enough bad news is now already in the price, she said.

“The valuation crunch for a lot of those companies is already done … we’re already getting [earnings downgrades](https://www.financedigest.com/takeover-target-thg-misses-downgraded-2022-earnings-guidance.html "Takeover-target THG misses downgraded 2022 earnings guidance"), and now the market is starting to look attractive in certain sectors.

Yet [Treasuries fell on Friday and slipped a little further in Asia trade](https://www.financedigest.com/stocks-fall-treasury-yields-rise-upon-final-2022-trading-day.html "Stocks fall, Treasury yields rise upon final 2022 trading day") on Monday, with benchmark 10-year yields up 3 basis points to 4.0392%. S&P 500 futures fell 0.2%, while [European futures](https://www.financedigest.com/analysis-inflows-into-unloved-european-telecoms-signal-brighter-future.html "Analysis-Inflows into unloved European telecoms signal brighter future") rose 0.4%.

Chicago wheat futures leapt more than 8% to a two-week high of $8.93 a bushel in early trade, before settling back to $8.75, after Russia’s withdrawal from a deal to allow Ukrainian grain [shipments to reach global](https://www.financedigest.com/sp-global-acquires-firm-to-bolster-capability-to-track-commodity-shipments.html "S&P Global acquires firm to bolster capability to track commodity shipments") buyers.

Depending on the scramble to replace planned Ukraine cargoes, [prices might even head](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain") into double digits for a period,” said Commonwealth Bank of Australia strategist Tobin Gorey. [Palm oil](https://www.financedigest.com/watchdogs-new-chief-says-high-prices-can-support-greener-palm-oil.html "Watchdog’s new chief says high prices can support greener palm oil") futures rose nearly 5%. \[GRA/\]\[POI/\]

Brazilian leftist leader Luiz Inacio Lula da Silva narrowly defeated [President Jair Bolsonaro in a runoff election](https://www.financedigest.com/wickremesinghe-a-wily-political-survivor-elected-sri-lankas-president.html "Wickremesinghe, a wily political survivor, elected Sri Lanka’s president"), and markets may be in for a bumpy ride on speculation around the cabinet makeup and the risk Bolsonaro questions the result.

SPOOKS

The main [focus this week will be on the Federal Reserve meeting](https://www.financedigest.com/dollar-dips-as-job-openings-fall-fed-meeting-in-focus.html "Dollar dips as job openings fall, Fed meeting in focus") on Tuesday and Wednesday and U.S. [jobs data](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") on Friday, though in Asia there will also be attention on Chinese economic data and the Reserve Bank of Australia’s Tuesday meeting.

China’s [factory activity](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening") unexpectedly fell in October, an official survey showed on Monday, helping knock the Shanghai Composite 0.3% lower. The yuan fell and is [heading for its longest monthly losing streak since](https://www.financedigest.com/dollar-heads-for-first-weekly-gain-since-february.html "Dollar heads for first weekly gain since February") 1994\. \[CNY/\]

The resignation of the chair of Beijing-based property developer Longfor Group also unnerved investors, with shares dropping 20% in [Hong Kong](https://www.financedigest.com/citadel-accelerates-hiring-push-in-hong-kong-and-london.html "Citadel accelerates hiring push in Hong Kong and London") and the sector under pressure.

The [Fed is all but certain to raise rates](https://www.financedigest.com/dollar-falls-after-fed-raises-rates-forecasts-future-hike.html "Dollar falls after Fed raises rates, forecasts future hike") by 75 basis points on Wednesday, with markets focused on the communication of the outlook and growing wary of being disappointed.

The latest round of hopes for a shift in the [Fed’s tone seems to have stemmed from a Wall Street](https://www.financedigest.com/wall-street-drops-treasury-yields-gyrate-on-fed-chairman-powells-remarks.html "Wall Street drops, Treasury yields gyrate on Fed Chairman Powell’s remarks") Journal article two weeks ago, flagging a possible discussion about slowing hikes.

But a [report from the same author over the weekend pointed to a lengthy period of high rates and traders](https://www.financedigest.com/euronext-delays-commitment-of-traders-report-until-further-notice.html "Euronext delays commitment of traders report until further notice") have now tempered initial optimism, pricing in the funds rate to hit near 5% by May next year.

The dollar also paused its retreat, [rising to 148.28 yen in the Asia session and holding firm](https://www.financedigest.com/analysis-rate-rises-pile-pain-on-sme-firms-in-u-s-and-europe.html "Analysis-Rate rises pile pain on SME firms in U.S. and Europe") at $0.9955 per euro.

Brent crude futures hovered at $95.46 a barrel. Spot gold held at $$1,641 an ounce. \[O/R\]\[GOL/\]

We need to be very careful and differentiate between [central banks](https://www.financedigest.com/central-banks-hike-rates-again-but-a-pause-is-coming.html "Central banks hike rates again, but a pause is coming") peaking, and central banks pivoting,” said NatWest Markets’ head of economics and strategy, John Briggs.

Peak means the year-to-date trends of surging yields, surging dollar, and weak [risk assets](https://www.financedigest.com/analysis-watch-out-risk-assets-the-rout-in-bonds-is-coming-your-way.html "Analysis-Watch out risk assets, the rout in bonds is coming your way") can lose momentum, but I think we need more visibility on a pivot to fully reverse all those.

(Editing by Kenneth Maxwell and Tom Hogue)


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