Asian markets limped into weekend rally as hawkish Fed signals policy

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Asian markets limped into weekend rally as hawkish Fed signals policy

Asian markets limped into the weekend Friday after another series of losses, dominated by the Federal Reserve'sFederal Reserve's hawkish tone that has set up an aggressive tightening of monetary policy.

The region struggled to take a lead from Wall Street, which recovered from steep intraday losses to end on a positive note, as traders fretted over the prospect of higher interest rates.

Analysts suggested that there was better clarity on policy after the Fed made clear it intends to act more decisively to rein in 40 year-high inflation by ramping up borrowing costs and offloading bond holdings.

The Fed's desire to tighten up has caused the dollar to rally against most major currencies and particularly the euro, which has been weighed down by European officials' reticence to move as aggressively on prices. The single currency is around a one-month low.

Markets have come under a lot of pressure this year as the end of cheap central bank cash, a Covid-fueled slowdown in China's economic activity, the war in Ukraine and soaring inflation come together in a perfect storm.

All three Wall Street indexes ended slightly higher after recovering from heavy losses earlier in the day thanks to bargain-buying, while some observers suggested recent selling may have gone too far.

Asia was unable to take over the reins.

In Tokyo, Hong Kong, Shanghai, Seoul, Singapore, Bangkok and Wellington were in the red, though Sydney, Taipei, Manila and Jakarta edged up.

Crude prices were barely moved in early Asian business at the end of another tough week after the US and allies pledged to release more than 200 million barrels of crude over the next few months to offset the loss of Russian supplies.

The decision comes on top of concerns about demand from China because of the lock-downs and other strict containment measures in the country, including the biggest city of Shanghai.

There is a feeling that the war in Ukraine, and any possible further sanctions on Russia, could send the oil market higher.

I still think. As more market participants fret about how the US administration will replenish the SPR drawdown, the sentiment-driven sell-off will give way, and fundamentals will reassert themselves, said Stephen Innes, SPI Asset Management's Stephen Innes.

Oil prices remain volatile due to concerns over Russian supply despite slowing demand in China and a depressed US summer driving season due to higher prices at the pump. He said that deficits are likely to persist but are only moderated by the accelerated strategic stock release from May to November and the weaker demand growth West Texas Intermediate: UP 0.1 percent at $96.15 per barrel.

The euro dollar was DOWN at $1.0863 from $1.0880 late Thursday.

The euro pound was DOWN at 83.12 pence from 83.17 pence.

New York - Dow was up 0.3 percent at 34,583.