Asian shares rally as China signals stronger stimulus

Stocks follow Wall Street higher amid speculation of a British government U-turn on its fiscal plans

Sydney — Asian shares extended gains on Friday as hopes of more Chinese stimulus and speculation of a British government U-turn on its fiscal plans supported risk sentiment, while the safe-haven dollar eased.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 2.6% on Friday. Japan’s Nikkei jumped 3.4%, enjoying the best day since March. US stocks, however, surged to close more than 2% higher on Thursday, as technical support and investors covering short bets drove a dramatic rebound from a sell-off earlier in the day.

Headlines that the British finance minister Kwasi Kwarteng was cutting short a trip to Washington to return to London and work on the fiscal plan also helped sentiment, according to Varathan. Investors are also nervously awaiting an impending deadline for the end of the Bank of England’s emergency bond-buying programme on Friday.

Following the strong US inflation report, the markets have now fully priced in a 75 basis point hike from the Fed at its November meeting and a 71.5% probability for another jumbo rate hike in December.

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