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Asian markets mostly rise after Wall Street rally, Euro falls

#Asian #markets #rise #Wall #Street #rally #Euro #falls

Asian markets rose on Friday after a third straight Wall Street rally, as below-average US data eased expectations for a stronger pace of rate hikes.

The euro gave back some of its gains after the European Central Bank hiked borrowing costs more than forecast as energy concerns and political unrest in Italy fueled fears of a monetary union recession.

The gains come at the end of a roller-coaster week for Asian investors trying to gauge their prospects with relatively positive earnings so far but mixed economic data and geopolitical events dampening sentiment.

All three major indexes in New York had strong days thanks to a rise in tech companies, while another larger-than-expected rise in US jobless claims suggested higher Federal Reserve interest rates and a surge in inflation could be on the way.

The reading — coupled with a big miss in the closely watched Philadelphia Fed business survey — could allow the central bank to pull out of its tightening campaign earlier, which would bring some relief to the world’s leading economy.

However, the numbers also indicated that the threat of a recession is growing and showed that the Fed is facing a difficult task of doing enough to bring inflation down from four-decade highs while fostering fragile growth.

Analyst Tapas Strickland said the July data was seen as volatile due to seasonal adjustments, but that higher jobless claims were “consistent with growing anecdotes of hiring freezes and layoffs at several multinationals” including Google, Apple and Microsoft.

“Easing of the labor market is what the Fed is targeting to put pressure on inflation, but as inflation remains elevated we should not expect a turning point from the Fed,” he added.

Tech firms have had a largely positive earnings season, he said, but for those in the “non-tech and non-financial sectors, the outlook has been weak and consistent with a slowing economy.”

Nonetheless, Asian markets were on track to end the week on a positive note.

Tokyo, Hong Kong, Shanghai, Sydney, Taipei, Singapore, Manila, Jakarta and Wellington all posted big gains.

But Susquehanna International Group’s Chris Murphy warned that with next week’s Fed policy meeting and plenty of gains to come, he doesn’t “necessarily think we’re completely out of the woods.”

The euro fell slightly after surging on Thursday in response to the ECB’s decision to hike interest rates by 50 basis points, twice as much as expected, in a bid to stem runaway inflation.

The move ends the bank’s eight-year-old negative interest rate policy and is in line with its global peers, notably the dovish Fed.

However, the single currency, which has rallied after hitting dollar parity last week, will face further pressure as US borrowing costs are likely to rise again after next week’s Fed meeting.

Recent political upheaval in Italy – with the overthrow of Prime Minister Mario Draghi’s government – will be a further headache for the ECB, which is also grappling with the constant threat of an energy crisis.

As Russia resumed gas supplies to Europe on Thursday after a 10-day maintenance shutdown, leaders fear Vladimir Putin could shut down the Nord Stream 1 pipeline at any time in retaliation for sanctions against Moscow related to the invasion of Ukraine.

– Key figures at 0230 GMT –

Tokyo – Nikkei 225: up 0.2 percent at 27,870.33 (breakthrough)

Hong Kong – Hang Seng Index: up 0.4 percent to 20,650.13

Shanghai — Composite: up 0.2 percent to 3,279.62

Euro/Dollar: DOWN at $1.0199 from $1.0232 on Thursday

Pound/dollar: DOWN at $1.1976 from $1.2002

Euro/Pound: DOWN at 85.16p from 85.22p

Dollar/yen: up at 137.55 yen from 137.34 yen

West Texas Intermediate: up 1.3 percent to $97.58 a barrel

North Sea Brent Crude: up 1.3 percent to $105.25 a barrel

New York – Dow: up 0.5 percent at 32,036.90 (close)

London – FTSE 100: up 0.1 percent at 7,270.51 (close)

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