HONG KONG: Most markets fell Friday as a weakening economy and disappointing earnings from tech giants offset signs that central banks could begin slowing their interest rate hike campaign.
After being battered for most of the year by worries that borrowing costs will continue to rise to fight inflation, traders were cheered by a report last week indicating the US Federal Reserve could take its foot off the gas soon.
That was followed by comments from policymakers hinting as much, while a string of data suggesting the world’s top economy was feeling the impact of higher rates also gave the bank room to manoeuvre.
Meanwhile, a below-expectation increase by the Bank of Canada this week and the signs the European Central Bank could take a less hawkish turn helped fuel speculation of a softer outlook for rates, helping push government bond yields down around the world.
Focus is now on the Fed’s next policy decision on Wednesday.
While it is widely tipped to announce another bumper hike, traders will be poring over the post-meeting statement for clues about its plans for December and 2023, with hopes it will indicate a slower pace.
Data showing the US economy grew more than expected was tempered by underlying figures showing, among other things, consumer spending – the key driver of growth – remained fragile.
“The notion ‘bad news is good news’ is increasingly driving price action as Fed hikes expectations are lowered in the face of weaker data,” said SPI Asset Management’s...
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