Asian stocks rise as investors gain a foothold at the end of a brutal 2022

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SINGAPORE — Asian stocks rose on Friday as investors looked to end the year on an upbeat note after U.S. data showed the Federal Reserve’s aggressive monetary policy easing inflationary pressures even as concerns over cases of COVID in China persist.

MSCI’s broadest Asia-Pacific ex-Japan equity index rose 0.71% and is expected to end December flat. The index is expected to end the year down 19% – the worst performance since 2008.

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The Japanese Nikkei rose 0.22%, while Australia’s S&P/ASX 200 index rose 0.34%. Chinese stocks rose 0.63%, while Hong Kong’s Hang Seng index rose 1.5%.

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U.S. stocks closed sharply higher overnight, supported by data showing a surge in U.S. jobless claims, suggesting interest rate hikes by the Federal Reserve are reducing inflationary pressures.

Investors fear that central bank efforts to tame inflation could lead to an economic slowdown, while uncertainty over how quickly China’s economy will recover following the removal of COVID controls has kept concerns markets down.

« Avoiding a slowdown is a tall order, » said Vishnu Varathan, head of economics and strategy at Mizuho Bank, noting the odds are high against economies that emerge unscathed from the global policy tightening.

As 2023 approaches, inflation has yet to be beaten, and investors will also be wary of geopolitical tensions stemming from Russia’s war in Ukraine and diplomatic tensions over Taiwan, analysts said.

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China’s healthcare system has been under pressure due to soaring cases since the country began rolling back its « zero-COVID » policy earlier this month, with several countries imposing or considering imposing restrictions on travelers from China.

The world’s second-largest economy is set to suffer a slowdown in factory production and consumption in the near term as workers and shoppers fall ill.

In the currency market, the US dollar was on course for its best annual performance in seven years. The dollar index, which measures the greenback against six major currencies, was down 0.048% on Friday, but entering the final trading hours of 2022 had gained nearly 9% on the year.

The pound was expected to see its worst performance against the dollar since 2016, when the United Kingdom voted to leave the European Union.

The pound last traded at $1.2057, up 0.04% on the day, but had depreciated around 11% on the year.

The Japanese yen strengthened 0.36% against the greenback to 132.53 to the dollar on Friday. The euro was down 0.01% at $1.066.

U.S. crude rose 0.5% to $78.79 a barrel and Brent to $83.81, up 0.42% on the day.

Although far from the highs seen earlier this year, Brent was still expected to close 2022 with a 5.76% gain after rising 50.2% in 2021, while West Texas Intermediate (WTI) was on track. for a 4.5% increase in 2022 after a 55% increase. win last year.

(Reporting by Ankur Banerjee; Editing by Simon Cameron-Moore)


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