Asian markets set to follow Wall Street higher

The Asian stock market was poised to follow Wall Street higher after signs of optimism in corporate earnings and comments from Federal Reserve officials that signaled that they are open to slowing the pace of rate hikes.

Australian shares opened higher and equity futures in Hong Kong went up after the S&P 500 closed at its highest level since September. The sentiment was boosted by upbeat earnings from Best Buy Co. and Abercrombie Fitch Co.

The Golden Dragon index of US-listed China shares fell for the third consecutive session in a row of declines that wiped out 8% of the benchmark. Chinese stocks fell this week due to rising Covid 19 cases and signs of new restrictions. The company, which is partly owned by Alibaba, was rekindled by reports that Ant Group Co. faces a more than $1 billion fine from China's central bank.

The benchmark yield rose to 3.76% after a rally in Treasuries. Oil rose amid uncertain supply outlook, along with a proposal by the European Union to soften Russian crude sanctions. The dollar went up a three-day climb. New Zealand's central bank is poised to raise interest rates by 75 basis points.

San Francisco Fed President Mary Daly said officials needed to be mindful of the lags in the transmission of policy changes while her Cleveland counterpart Loretta Mester said she is open to moderating the size of rate hikes. The peak inflation narrative was confirmed by the US manufacturing data falling below forecasts.

We think the Fed leadership wants to get off the 75 basis-point hamster wheel, even though it is finding it hard to do so while maintaining control of financial conditions, Evercore ISI spokesman Krishna Guha wrote in a note. We think the Fed is headed for a hawkish slowing. The slowing part is what matters for us at least. The story was produced with the help of Bloomberg Automation.

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