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HomeEconomyAsia shares track late Wall Street rebound with focus firmly on Fed

Asia shares track late Wall Street rebound with focus firmly on Fed

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

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HONG KONG (Reuters) – Early trading on Tuesday after rallying in the final hours of New York trading as investors turned their attention to a significant Federal Reserve rate hike expected this week to combat inflation. Asian stocks edged higher.

The actions of the US Central Bank are driving market sentiment as traders prepare for a rising interest rate environment rather than the Ukraine war or corporate earnings.

MSCI’s broadest index of non-Japanese Asia-Pacific equities early in the Asian trading day (.MIAPJ0000PUS) U.S. stock futures, the S&P 500 e-minis, rose 0.11%, but were up 0.7%.

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Japan’s Nikkei (.N225) advanced 0.38% and Australian shares (.AXJO) increased by 1.1%.

China’s leading CSI300 index (.CSI300) It was 0.54% higher in early trading.Hong Kong’s Hang Seng Index (.his) increased by 0.92%.

Wall Street’s major indexes closed higher after an mid-session see-saw on Monday as investors await how aggressive the Fed will hike rates at this week’s policy meeting. rice field.

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 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%. That’s high enough to stifle growth, pushing down bond yields on the longer end of the curve.

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

Rising interest rates caused a sell-off of government bonds. Yields on his benchmark 10-year Treasury bill remained high at 3.4846%, the highest level since April 2011, after he reached 3.518% on Monday.

The two-year yield, a barometer of future inflation expectations, reached 3.9528% 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

Higher yields strengthened the dollar and made gold less attractive.

The Dollar Index, which measures the currency against its six counterparts, was 0.0373% stronger at 109.58.

Gold is slightly cheaper. Spot gold traded at $1,675.63 per ounce.

Crude oil prices also fell as the dollar strengthened and global growth prospects faltered. US oil prices fell 0.17% to $85.58 a barrel. Brent crude fell to $91.9 a barrel.

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Reporting by Julie Zhu. Editing by Edwina Gibbs

Our criteria: Thomson Reuters Trust Principles.

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