26.3 C
Sunday, October 2, 2022
HomeAsiaAsia shares gain ground, hefty Fed rate hike seen priced in

Asia shares gain ground, hefty Fed rate hike seen priced in

People walk past a screen displaying the Hang Seng Stock Index outside the Hong Kong Stock Exchange in Hong Kong, China, 19 July 2022. REUTERS/Lam Yik/File Photo

Register now for free, unlimited access to Reuters.com

HONG KONG (Reuters) – Markets priced in a big rate hike by the U.S. Federal Reserve this week to fight inflation, after the final hours of New York trading rallied. Asian stock markets rose on Tuesday.

Market sentiment is driven more by the actions of the US Central Bank than by the Ukraine war or corporate profits.

European markets were set higher open with Eurostox 50 futures across all regions up 0.37%, German DAX futures up 0.53% and FTSE futures up 0.61%. US stock futures S&P 500 e-minis rose 0.22%.

Register now for free, unlimited access to Reuters.com

“At this week’s Fed meeting, many investors have already fully priced in a 75-basis-point rise,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.

“The market will be very careful about the tone of the meeting going forward. Unless Fed officials make strong hawkish remarks, the stock market could (further) rebound.”

MSCI’s broadest index of non-Japanese Asia-Pacific equities (.MIAPJ0000PUS) rose 1.2%, while Australian shares (.AXJO) increased by 1.2%.

In Japan, where trading resumed after the holiday, the Nikkei (.N225) Technology stocks were the main drivers of the gains, gaining 0.48%.

China’s leading CSI300 index (.CSI300) 0.2% higher than Hong Kong’s Hang Seng Index (.his) increased by 1.2%.

Sentiment in Hong Kong boosts after government warns of imminent changes to controversial COVID-19 hotel quarantine policies for all arrivals, saying it wants an “orderly opening” it was done. read more

Monday, S&P 500 (.SPX) and NASDAQ Composite (.IXIC) At the end of the Fed’s Sept. 20-21 policy meeting, markets fully priced in an interest rate hike of at least 75 basis points, rebounding after recording the worst weekly percentage drop since June.

The S&P 500 was up 0.69%, the Nasdaq was up 0.76% and the Dow Jones Industrial Average was up. (.DJI) increased by 0.64%.

The market is expected to rise to 4.5% by early 2023, compared to the Fed’s current policy rate range of 2.25% to 2.5%. read more

Rising interest rates caused a sell-off of government bonds. The benchmark 10-year Treasury yield hit 3.4848%, its highest level since April 2011, after reaching 3.518% on Monday.

The two-year yield, a barometer of future inflation expectations, reached 3.9473% after rising to an almost 15-year high of 3.970%.

The United States is not the only country where interest rates are expected to rise. With most of the central banks meeting this week, from Switzerland to South Africa, expected to hike rates, markets are split on whether the Bank of England will rise by 50 or 75 basis points. read more

But China’s central bank has gone its own way, cutting its repo rate by 10 basis points on Monday to support the ailing economy.

Another exception is the Bank of Japan, which is also scheduled to meet this week and shows no signs of abandoning its ultra-loose yield curve policy despite the yen’s sharp decline. read more

Rising U.S. Treasury yields pushed the dollar higher, making gold less attractive.

The Dollar Index, which measures the currency against its six counterparts, rose 0.046% at 109.59. Sensitive to global growth prospects, the New Zealand dollar fell 0.5% to $0.5923, its lowest since May 2020.

Gold is slightly cheaper. Spot gold traded at $1,671.93 per ounce.

US crude rose 0.03% to $85.76 a barrel. Brent crude rose to $92.12 per barrel.

Register now for free, unlimited access to Reuters.com

Reporting by Julie Zhu. Editing by Edwina Gibbs

Our criteria: Thomson Reuters Trust Principles.



Please enter your comment!
Please enter your name here

Most Popular

Recent Comments