Asian shares rose as hopes of an audit deal boost China’s technology.

Pedestrians wait to cross a road at an intersection near a giant stock index in Shanghai, China, on August 3, 2022. REUTERS/Aly Song

SYDNEY, Aug 26, 2010 (FBC) Asian shares were boosted by news that China and the United States may be on track to scrap an audit deal, with traders eagerly awaiting a speech by Federal Reserve Chairman Jerome Powell on rate hikes. Later in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.6% in early Asian trade, led by Hong Kong-listed Chinese technology shares (.HSTECH) which rose 1.3%. Shares of Hong Kong’s Alibaba ( 9988.HK ) rose 4 percent.

That helped the Asian index gain 0.4% for the week.

The Wall Street Journal reported on Thursday that Washington and Beijing had reached an agreement to allow US auditors to travel to Hong Kong to examine the audit records of US-listed Chinese companies. Read more

Hong Kong’s Hang Seng Index (.HSI) rose 0.7%, Japan’s Nikkei (.N225) rose 0.9%, and South Korea’s (.KS11) gained 0.5%.

On Wall Street, stocks rallied as investors digested comments from Fed officials until inflation took a bite out of the economy. Read more

The S&P 500 rose 1.4% and the Nasdaq gained 1.67%, led by gains in Nvidia and other technology-related stocks.

“So it’s a fair bet that Powell’s speech today will have the same effect,” said Robert Carnell, regional head of Asia-Pacific research at ING.

“If that’s the case, the market response is likely to be a front and back yield increase, with stocks selling off and dollar strength markets seeming to position themselves for a more supportive set of opinions.”

Investors supported expectations that the Fed may be leaning towards a slower rate hike, with US inflation running at an annualized 8.5% above the Fed’s 2% target. But Powell’s speech Friday will be scrutinized for any suggestion that the economic slowdown could change the Fed’s strategy.

Interest rates indicate a 60% chance of a 75 bp Fed hike in September.

“The experience of Jackson Hole 2021 makes the Fed chairman wary of making the same mistake twice. That in itself argues for either looking too far ahead or erring on the wrong side of the message,” said Alan Raskin, macro strategist at Deutsche Bank. Read more

“But markets have largely taken this on board, leading to a short-term ‘buy the rumour, sell the fact’ technical bond rally, US dollar selling and risk-adjusted equity trading.”

In the currency market, the dollar was little changed against a basket of major currencies. Commodity-exposed Australian and New Zealand dollars fell 0.4% against the greenback.

The yield on the benchmark 10-year Treasury note rose slightly to 3.0425%, compared with 3.024% the previous day in the US.

Two-year yields touched 3.3803%, compared with 3.374% in the US, rising amid traders’ expectations of higher Fed funds rates.

Oil prices regained some ground on Friday after falling about $2 a barrel last session on concerns about Iran’s oil exports being approved and fears of a rise in US interest rates. Read more

Brent crude was up 0.5 percent in early Asia at $99.87 a barrel, while U.S. crude rose by a similar margin to $96.01 a barrel.

Gold was slightly lower. Spot gold was trading at $1755.4698.

Editing by Sam Holmes

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