Asian stocks gain on China recovery prospects and central bank caution

HONG KONG, March 3 (Reuters) – Asian stocks rose on Friday on prospects for a sustained economic recovery in China and Wall Street reversed overnight losses following comments by the head of the Atlanta Federal Reserve that signaled a measured approach to raising U.S. interest rates.

Global markets have been buoyed by strong U.S. data in recent weeks, including U.S. jobless claims, which suggested the central bank may want to keep rates higher for longer.

But investors breathed a sigh of relief after Atlanta Federal Reserve President Rafael Bostic said he wanted a “slow and steady” quarter-point U.S. rate hike to reduce risks to the economy. read more

Investors were also waiting to see what economic targets China’s parliament sets and who it picks for top economic posts. The annual session of Parliament begins on Sunday.

Investors’ appetite for holding riskier assets has improved recently, in signs that the world’s second-largest economy is making a steady recovery after the government abandoned strict Covid restrictions in December.

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“Everyone is looking at China’s growth target for 2023, wondering if it will be 5%, 5.5% or even 6%. This number will indicate the level of government policy stimulus. The market and investors are very worried about this,” said Beijing Uni Asset Management’s chief investment officer. Zhang Zhihua said.

European markets were set for a higher open, with pan-region Euro Stoxx 50 futures up 0.59%, German DAX futures up 0.39% and FTSE futures up 0.31%.

MSCI’s broadest index of Asia-Pacific shares outside Japan ( .MIAPJ0000PUS ) rose 0.7%, on track for its first five-week gain. The index is up 1.6% so far this month. U.S. stock futures, the S&P 500 e-minis, fell 0.13%, but the major indexes ended in regular trade overnight.

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Australian shares (.AXJO) rose 0.39%, helped by gains in miners and financials, while Japan’s Nikkei share index (.N225) climbed 1.57% to its highest in nearly three months.

China’s blue-chip CSI300 index (.CSI300) was up 0.2% in afternoon trade, while the Shanghai Composite (.SSEC) gained 0.34%. Hong Kong’s Hang Seng Index (.HSI) advanced 0.89%.

U.S. stocks rose on Thursday, reversing earlier losses, as Treasury yields pulled back from earlier highs following rate comments from Atlanta Fed President Bostic.

The Dow Jones Industrial Average (.DJI) rose about 1%, while the S&P 500 (.SPX) and Nasdaq Composite (.IXIC) both rose about 0.75%, while Tesla Inc ( TSLA.O ) fell nearly 6%. The company’s plan to launch an affordable electric vehicle has failed to attract investors. read more

The benchmark 10-year Treasury note yield touched 4.0501%, compared with 4.073% on Thursday. Two-year yields rose to 4.8879%, compared with a US close of 4.904%, with traders expecting Fed funds rates to be higher.

Returning to the foreign exchange market, the dollar index, which tracks the greenback against a basket of other major currencies, eased to 104.82. The index is now up more than 1% for the year, but is still down from a September high of $114.

The dollar was down 0.11% at 136.61 yen, its highest since Dec. 20, after hitting 137.10 overnight.

The European single currency rose 0.1% to $1.0611 on the day, up 0.33% in a month, from a near two-month low of $1.0533 earlier in the week.

In the energy market, oil prices were firm, boosted by a strong economic recovery in top crude importer China and signs of easing concerns about aggressive U.S. price hikes.

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US crude was down 0.13% at $78.06 a barrel. Brent crude oil touched $84.66 a barrel.

Gold was slightly higher. Spot gold traded at $1840.28 an ounce.

Reporting by Julie Zhu Editing by Sri Navaratnam and Simon Cameron-Moore

Our Standards: Thomson Reuters Trust Principles.

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