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Title: Asian markets gain, investors anxious for U.S. rate hike clues

Aug 25, 2022 02:05AM ET

By: AnalysisWatch

On Thursday, Asian stock markets were broadly positive and the dollar weakened slightly as investors nervously awaited the U.S. Federal Reserve's annual conference in Jackson Hole to get information on how sharp interest rate hikes could be in the future.

In early European trading, futures on the pan-European Euro Stoxx 50 index were up 0.25%, German DAX futures were up 0.34%, and FTSE futures were up 0.29% to 7,494.5 points.

The S&P 500 e-mini futures in the United States increased by 0.42%.

The Federal Reserve's annual monetary policy conference is expected to begin Friday in Jackson Hole, Wyoming.

Investors lowered their expectations that the Fed may move to a slower pace of rate hikes as U.S. inflation remains at 8.5 percent year-over-year, well above the Fed's 2 percent target.

But Chairman Jerome Powell's speech will be closely watched for any indications that slowing economic growth could change the Fed's strategy.

Investors now expect the federal funds rate to peak at 3.80% in March 2023, up from 3.62% two weeks ago, said Tapas Strickland, NAB's economics director.

Interest-rate futures indicate a 60% chance of a 75 basis-point Fed rate hike in September, up from 50% earlier in the week.

Still, MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent, as U.S. stocks ended the previous session with slight gains.

Australian shares rose 0.7% and Japan's Nikkei stock index rose 0.72%.

China's CSI300 was up 0.1%, while Hong Kong's Hang Seng Index opened up 1.7% in the shortened trading session due to a typhoon.

In Asian trading, the yield on the benchmark 10-year Treasury note reached 3.1021%, compared with 3.106% at the U.S. close on Wednesday.

Two-year Treasury yields have risen as traders anticipate higher Fed funds rates, reaching 3.386 percent, up from 3.386 percent at the close in the United States.

Yields also rose overnight, though that didn't prevent U.S. equity markets from rising Wednesday.

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