Asian stocks up as recession fears ease

HONG KONG, July 8 (AFP): Asian markets rose Friday on easing recession fears with optimism boosted by hopes that Joe Biden will remove some Trump-era tariffs from Chinese goods, while the euro extended losses and headed close to parity with the dollar.
The safe-haven yen also picked up following news of Japan's former prime minister Shinzo Abe being shot during a campaign rally. He is still fighting for his life.
Equities were also boosted by reports that Beijing was considering a huge stimulus push to the struggling economy by allowing local governments to raise billions of dollars through bond issuance for infrastructure projects.
But surging inflation, rising interest rates and a fresh flare-up of Covid infections in Shanghai continued to keep investor sentiment grounded.
Traders were handed a strong lead from Wall Street, where all three main indexes climbed for a fourth straight day, helped by two top Federal Reserve officials who said the economy could withstand sharper rate hikes and maintain growth.
There has been growing talk that the fast pace of monetary tightening by the bank will tip the world's top economy into recession.
But Christopher Waller, a member of the board of governors, said worries were overblown and that a strong jobs market would provide a buffer, adding that rates needed to go up sharply and quickly. St Louis Fed president James Bullard also said there was "a good chance of a soft landing".
Asian equities advanced with Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Mumbai, Taipei, Manila and Jakarta all in the green. Shanghai closed slightly down.
Tokyo's Nikkei 225 ended up but saw its early big gains wiped out after news filtered through of Abe's shooting. Some observers said that because he still held sway over his ruling LDP party, it continued to stick with his ultra-loose monetary policy known as Abenomics.
The yen briefly strengthened to 135.34 per dollar, compared with 136.08 in the morning, as analysts speculated on how the possible loss of Abe's still-strong influence in Japan could see changes in policy.
Masahiro Yamaguchi, of SMBC Trust Bank, said: "It could be negative for markets if the government's policy, including its stance on monetary easing, is affected as it was evident that he was pulling the strings behind the scenes in many ways.
"If it becomes possible for (current Prime Minister Fumio) Kishida to carry out policies he wanted to, such as financial tax and regulations on share buy-back, that would be negative for markets."
The Fed's policy plans will be in focus later Friday when US employment data is released, with a strong reading providing the central bank with evidence to stick to its hawkish line.
But Matt Simpson at StoneX Financial said there were indications the jobs market could be showing signs of weakness.
The report "is unlikely to deter the Fed from a 75 basis points hike this month. But when the precious non-farm payroll numbers begin to crumble, so does the Fed's argument that the US economy is robust", he said.