Asian stock markets experienced a surge on Wednesday, while the dollar took a step back as traders adjusted their U.S. interest rate expectations following a dovish shift from Federal Reserve officials. However, all eyes remain on the U.S. inflation data scheduled for release on Thursday.
Following gains in the S&P 500 overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 1.3% to reach a two-week peak in morning trade. Concurrently, Japan’s Nikkei rose by 0.5%.
Speculations over another potential interest rate hike by the Fed this year have receded this week, resulting in a sharp fall in Treasury yields from 16-year highs and dragging the dollar down with them. The 10-year yield experienced a drop of 12.7 basis points on Tuesday and held steady in Asia on Wednesday at 4.64%, after touching 4.884% post the release of robust U.S. jobs data on Friday.
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