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Asian markets on course to end week on positive note

AFP  |  Hong Kong 

The upbeat tone that has characterised this week helped Asian markets to fresh gains on Friday, with on course for a sixth straight day of rises.

Investors globally have been riding a wave of optimism since last week when the of the Federal Reserve indicated it will likely slow its pace of interest rate hikes, while there were also signs that and the US could eventually reach a trade deal.

And the gains were not limited to equities, with rising about 20 per cent from 17-month lows at the end of December, while high-yielding currencies were being supported by a new-found demand for riskier assets.

Friday's rally followed another positive lead from Wall Street, where dealers brushed off disappointing as they focused on the prospect that borrowing costs will not rise as much as previously feared.

Fed minutes Wednesday showed policymakers are happy to hold off any more rate hikes as they assess the state of the economy, backing up dovish comments last week by its

There was a slight wobble in after Powell on Thursday suggested the bank's securities holdings should be "substantially smaller" -- a sell-off by the Fed of such assets would lift interest rates.

But the general mood remained upbeat as a number of other top Fed officials indicated they were happy to see a break in hikes.

"Markets are ultimately waiting to see if the Fed's new rhetoric related to stepping back, does it translate to action, and does the Fed actually pause at some point," told TV in

"That's really what we are waiting for to see a sustained move higher" in stocks, he said.

In Asia, rose 0.3 per cent in the morning, having risen more than five per cent since last Thursday's close, while was also up 0.3 per cent and added 0.7 per cent by the break.

rose 0.6 per cent, added 0.4 per cent and jumped 0.6 per cent while there were also gains in and Jakarta, though was slightly lower.

Markets are now awaiting the next development in the China-US trade spat after three days of talks this week that both sides indicated had been productive.

The Chinese yuan is one of the main beneficiaries of the progress in trade talks and softer Fed outlook, with the unit sitting at a more than five-month high against the dollar, despite a string of weak data pointing to a growth slowdown in the world's number-two economy.

However, observers were sceptical about how long it will maintain its strength.

"The yuan can hold up fine" until the Fed hikes rates again, trade tensions resume and ramps up its stimulus measures, Michael Every, of financial markets research at in Hong Kong, said.

"It's a 'when' and not an 'if' for when it reverses direction again and we test new lows".

Other regional units were mixed Friday but were mostly holding up after a week of gains.

However, warned in a client note about the possible impact from the ongoing shutdown, which shows no signs of ending, and the Brexit vote next week that the government is likely to lose.

On markets both main contracts were slightly lower but were heading in the right direction after plunging more 40 per cent from four-year between October and the end of December.

"Positive vibes on US-trade talks, a relief rally in global equities, optimism in OPEC-led cuts and falling US rig count have raised prices significantly in the new year," said commodities analyst

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 11 2019. 08:55 IST