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Asian shares advance as inflation worries fade to background

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TOKYO — Asian share prices advanced on Friday as a shock from a surprisingly strong U.S. inflation reading ebbed, with investors now hopeful that the worst price hikes could be soon over.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7% to reach its highest level in two weeks while Japan’s Nikkei gained 1.1%, helped by brisk earnings.

U.S. stock futures were up about 0.3% after a mixed session on Thursday when the S&P 500 ended 0.06% higher while tech-heavy Nasdaq rose 0.52%.

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The world’s stock prices posted their biggest fall in over a month on Wednesday following a surprisingly strong reading on U.S. inflation.

The U.S. consumer price index rose 6.2% year-on-year in October, the strongest advance since November 1990.

“Inflation is obviously a risk to watch. But stock prices will face a major crash only if the Federal Reserve turns out to be completely wrong in its assessment and is forced to raise interest rates rapidly. That’s not where we are now,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

While the inflation data suggested that the current wave of price spikes due to chronic worldwide supply constraints could have more staying power than many had hoped, many investors still think inflationary pressure will eventually ease, rather than strengthen.

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“If we get over the year-end holiday shopping season, when demand should be peaking, perhaps inflation could subside,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

“U.S. holiday sales are expected to rise 8.5% to 10% this year, with some consumers said to be starting to buy earlier than usual because of worries about supply glitches. If that’s the case, we could see a pretty strong retail sales number next week, which would be positive for stocks,” he added.

U.S. retail sales for October are due next Tuesday.

Bond yields ticked up, with the 10-year U.S. Treasuries yield rising 1.9 basis points to 1.572% on Friday after a market holiday on Thursday.

Money markets have already priced in two rate hikes next year.

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In the currency market, the dollar held firm after Wednesday’s strong U.S. inflation reading fanned expectations the Fed would tighten monetary policy faster than previously thought.

An index of the dollar against six other currencies rose to a 16-month high of 95.264 as the euro slipped to $1.1449, near its lowest since July last year.

The yen softened to 114.26 per dollar, near its four-year low hit last month while commodity currencies such as the Australian dollar and the Canadian dollar were on a back foot.

The Australian dollar hit a five-week low of $0.7286 while the Canadian dollar slipped to C$1.2588 per dollar, a low last seen in early October.

“It is interesting if a growing number of investors are selling commodity currencies on expectations that the Fed’s tightening will drive down commodity prices,” said Makoto Noji, chief FX strategist at SMBC Nikko Securities.

Oil prices dipped slightly as the market grappled with a stronger U.S. dollar along with concern over increasing U.S. inflation, and after OPEC cut its 2021 oil demand forecast due to high prices.

Brent crude futures were down 0.36% at $82.56 per barrel while U.S. West Texas Intermediate (WTI) futures dropped 0.33% to $81.32 per barrel.

Gold prices stayed near Wednesday’s five-month highs as investors sought inflation hedges. They last stood at $1,862 per ounce, near Wednesday’s high of $1,868.5.

(Reporting by Hideyuki Sano; Editing by Sam Holmes)

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Bloomberg names Green ME of finance for Americas

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Rick Green

Rick Green has been named managing editor for finance in the Americas at Bloomberg News, effective July 11.

He is currently senior editor for markets at Bloomberg.

Green was previously a team leader for distressed company news. He was also corporate finance editor and a senior editor on the U.S. finance team.

Before Bloomberg, Green was assistant managing editor for business and technology at Newsday. He also worked at BusinessWeek magazine as a senior editor and at SmartMoney magazine.

 





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Liberty Steel secures time with Greensill as debt rstructuring continues

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Liberty Steel Group has entered a standstill agreement with Greensill Bank.

It pauses all enforcement actions between the South Yorkshire headquartered business and the subsidiary of the collapsed financial institution as it focuses on recovery.

Greensill Bank, part of Greensill Capital, is Liberty’s largest creditor on the business’s debt facilities, provided in 2019.

Read more:£26m British Steel Special Profiles upgrade given the go-ahead

The agreement lasts until October 31, with potential to extend until the end of the year.

Liberty said it will enable the company to develop a longer term sustainable financing structure, with detailed due diligence and information exchange continuing between the two parties.

A Liberty spokesperson said: “Today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders.

“We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle. Our core businesses continue to perform well and are operationally strong despite some economic headwinds.”

HMRC had filed then withdrew a winding up petition for Liberty earlier this year as progress with creditors was made.



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At Close of Business: Jordan Murray talks an Australian republic

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Journalist Jordan Murray discusses revived debate over the possibility of an Australian republic.



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