Close up of red and green numbers on ASX board

The ASX will rise as European stocks rise on signs of smaller US interest rate hikes

Australian stocks are expected to rise on Friday after European stocks rose overnight as hopes of lower interest rate hikes from the US boosted investor confidence.

ASX futures were up 14 points, or 0.2 percent, at 7,267 by 7:15 a.m. AEDT.

The Australian dollar rose 0.5 percent to 67.62 US cents.

Stocks hit a two-month high on Thursday and the US dollar tumbled towards a three-month low after the Federal Reserve signaled smaller rate hikes from next month, followed by news from Frankfurt that the European Central Bank (ECB) will plow us.

Wall Street was closed for the Thanksgiving holiday so it was up to Europe to continue the recovery in market confidence.

“Federal Reserve minutes signaled that some reasonable voices are trying to dry up Fed Chair Powell’s unrelenting ‘hike, hike, hike’ chant,” said UBS Chief Economist Paul Donovan.

A “substantial majority” of Fed policymakers have agreed that slowing the pace of rate hikes is “probably soon to be appropriate,” minutes released on Wednesday showed.

However, Mr. Donovan pointed out that there is still no sign of an actual stop and that various Fed members believe rates need to rise “slightly higher” than expected.

Futures markets show that investors now expect US rates to peak at just over 5 percent by May, pricing in a roughly 75 percent chance the Fed will now hike 50 basis points, rather than too transitions to the 75 basis points it recently applied.

The relevant minutes from the ECB on Thursday showed that rate setters fear that inflation could now become entrenched in the euro zone.

“The data coming in so far suggests that even as we approach estimates of the ‘neutral’ rate, the scope for a slowdown in the pace of interest rate adjustments remains limited,” one of the most influential board members, Isabel Schnabel, said separately.

For the currency markets, this meant that the dollar’s seven-week sell-off continued.

The euro rallied as high as $1.0447, close to a recent four-month high of $1.0481, while the US dollar is down 0.6 percent against the Japanese yen to yen 138.70 and above 1.20 US dollar weakened against sterling.

“The dollar may remain under pressure a little longer, but it is now likely embedding many Fed-related negative factors,” ING analysts wrote.

The pan-European STOXX 600 index rose 0.5 percent, Germany’s DAX rose 0.8 percent and Britain’s FTSE rose one percentage point.

Binance’s $1 trillion crypto bailout

Meanwhile, cryptocurrency exchange Binance announced on Thursday that it is committing $1 billion to establish an Industry Recovery Initiative (IRI) to invest in digital asset companies.

The move comes at a time when the crypto market is reeling from the collapse of FTX, which is seeking Chapter 11 bankruptcy protection in the United States.

The collapse of one of the world’s largest crypto exchanges has also fueled concerns about the industry’s continued ability to attract investment from venture capital and private equity giants.

Binance said it intends to increase its commitment amount to $2 billion in the near future based on needs.

“We anticipate this initiative to take around six months and be flexible in terms of asset structure – tokens, fiat, equity, convertible instruments, debt, lines of credit, etc,” the crypto exchange added in a statement.

It said such a fund would help “reduce further negative impacts from FTX” without giving an exact figure for the bailout.

Several crypto firms have been preparing for the FTX collapse, and many are counting their million-dollar exposure to the ailing exchange.

raw materials

Spot gold rose 0.5 percent to sell for $1,775.10.

In oil markets, Brent crude fell 0.3 percent to $85.12 a barrel, while West Texas crude was in the green but almost unchanged at $77.96 a barrel.

ABC News/Reuters

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