SYDNEY, Nov 28 (Reuters) – Asian shares are set to end a tough November on steadier ground as revived hopes of an imminent U.S. rate cut helped soothe valuation jitters and sent Treasuries rallying for a fourth straight month.
U.S. markets, which were closed overnight for the Thanksgiving holiday, are due for a shortened session on Friday, so activity is more muted than usual across the major asset classes. European stocks traded mostly higher, while currencies were much more sedate.
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November this year proved to be unusually choppy for global equities as concerns about tech stocks’ sky-high valuations shook markets while a U.S. government shutdown ended only after a record 43 days. The risk-barometer bitcoin slid 16% in November.
The lack of economic data from the government shutdown has made the Federal Reserve cautious about further policy easing, but heavyweights like Fed Governor Christopher Waller and New York Fed President John Williams have voiced support for a rate cut next month, stabilising sentiment.
Fed funds futures are implying an 85% chance of a rate cut next month, a sea change from just 30% a week earlier, CME FedWatch showed.
“If I put it all together, and if I look at valuation compared to bubbles in the past, for example, I think we’re not there fully yet,” said Vincenzo Vedda, chief investment officer at DWS.
“We believe generally that inflation remains in check… Generally speaking, in the next 12 months, we have decent growth… Overall, you have a benign environment for risky assets.”
BOJ HIKE IN VIEW
The yen was flat at 156.37 per dollar, having bounced off a 10-month low of 157.9 hit last week. Investors are watching for intervention from Japanese authorities after weeks of verbal jawboning to stem the currency’s relentless slide.
In the broader currency market, the dollar was steady against its major peers on Friday but was set for a weekly loss of 0.7%, the biggest since July.
Prospects of Fed easing policy in December added to the rally in Treasuries. Treasury futures prices were affected by the CME outage but they were otherwise set for a fourth straight month of gains.
Oil prices rose on Friday although were set for a fourth straight month of losses as the U.S. pushed for the peace plan for the Ukraine war.
Spot gold prices climbed 0.6% to $4,182 per ounce, bringing the monthly gain to 4.5%, although they are still some distance away from the record high of $4,381.
Reporting by Stella Qiu and Tom Westbrook; Editing by Sam Holmes
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