SYDNEY : Asian markets extended a risk rally on Wall Street on Friday to end a tumultuous week that saw a brewing banking crisis send bond yields plunging while market participants sharply lowered expectations of future interest rate hikes in Western economies.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.9 per cent on Friday, erasing earlier losses this week. Japan's Nikkei climbed 0.5 per cent.S&P 500 futures eased 0.1 per cent and Nasdaq futures were flat after major U.S. stock indices rallied hard on easing fear of a global banking crisis.
"It is rare that financial turmoil emerges in such a high-inflation environment, and while tighter financial conditions come at a convenient time for inflation-fighting central banks, they are unlikely to believe that tighter financial conditions alone will be enough to return inflation to target." Two-year Treasury yields continued to climb on Friday, rising 8 basis points to 4.2137 per cent and pulling away from a six-month low of 3.7200 per cent touched earlier this week. Yields were, however, headed for the steepest weekly decline since February 2020 when markets were thrown into chaos by COVID-19 fear.
The euro steadied at $1.0615, after having received a boost from the ECB's half-point hike overnight.
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