BENGALURU: Most emerging Asia stocks advanced on Friday with Singapore’s benchmark hitting an all-time high, as waning expectations of a near-term US rate increase spurred demand for risk assets, while regional currencies gained ground.
The MSCI gauge of emerging Asia equities gained 1.6 percent and was headed for its best session in seven days, with tech-heavy South Korea and Taiwan gaining 1.8 percent and 1.5 percent, respectively.
Singapore’s Straits Times Index climbed as much as 1.3 percent to a record 5,820.69 points, led by blue-chip banks. The index was up 1.9 percent for the week, on course for the steepest rise since early July.
Expectations of a Federal Reserve rate hike have moderated ahead of key US inflation data, while the yen’s appreciation has weakened the dollar and helped Asian currencies recover some lost ground, said DBS economist Radhika Rao.
“Risks nonetheless remain two-sided, as any renewed US-Iran kinetic conflict could drive oil prices higher and weigh on Asian assets anew,” Rao said.
Treasuries rallied, and the US dollar index slipped after Fed Governor Christopher Waller said overnight he would favour keeping rates unchanged at September’s policy meeting if upcoming inflation reports reinforce signs of disinflation.
Futures markets lowered the probability of a rate hike later this month to about 50 percent, from roughly 63 percent a day earlier.
The dollar’s retreat following Waller’s comments supported Asian currencies, with the South Korean won leading gains at 0.4 percent. Taiwan’s dollar rose 0.2 percent.
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