A Rise in Asian Markets Ahead of a Potential US Rate Increase

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As investors prepared for another significant interest rate rise by the Federal Reserve to tame inflation, Asian markets closed mainly higher on Tuesday.

Seoul, Shanghai, and Hong Kong made progress. Tokyo fell a little. A $1 increase in a barrel was seen in oil.

Prior to this week’s Fed meeting, when officials are anticipated to announce a rate rise of up to three-quarters of a percentage point, treble the average margin, Wall Street closed the day up 0.1 percent. The Fed’s benchmark rate would therefore be in the 2.25 percent to 2.5 percent range, which is the highest level since the spring of 2018 before the coronavirus outbreak.

According to Tan Boon Heng of Mizuho Bank in a research, mixed market responses indicate that investor emotions are divided, while optimists look for a “Fed dial down.”

The Nikkei 225 in Tokyo lost less than 0.1 percent to 27,680.41 while the Shanghai Composite Index increased by 0.8 percent to 3,276.71. Hong Kong’s Hang Seng increased by 1.5 percent to 20,868.29.

The largest e-commerce business in the world, Alibaba Group, revealed intentions on Tuesday to modify the status of its Hong Kong-traded shares so that customers in mainland China may more easily purchase them.

Alibaba conducted a secondary offering in Hong Kong in November 2019 after going public in New York in September 2014. The proposed modification would elevate Alibaba’s Hong Kong status to principal listing status along with New York, enabling mainland brokerages to trade the company’s shares.

After the government announced that the South Korean economy expanded by a faster-than-anticipated 0.7 percent over the previous quarter in the three months ending in June, the Kospi in Seoul rose 0.2 percent to 2,408.60.

The S&P-ASX 200 in Sydney increased by 0.1 percent to 6,798.00.

The Indian Sensex began trading at 55,365.32 down 0.7 percent. Southeast Asian markets increased while New Zealand markets declined.

Investors are concerned that the Fed’s aggressive rate rises to fight inflation, which is near four-decade highs, and similar moves by central banks in Europe and Asia might stall global economic expansion.

The United States’ inflation rate has increased to 9.1 percent, the highest level since 1981.

Although the American economy is slowing, solid hiring indicates that a recession is not imminent, according to Treasury Secretary Janet Yellen. A reasonably robust labor market is another argument made by Fed members who have openly backed a rate increase that the economy can withstand higher borrowing costs.

The S&P 500 on Wall Street increased to 3,966.84 on Monday. To 31,990.04, the Dow Jones Industrial Average increased by 0.3%. To 11,782.67, the Nasdaq Composite decreased by 0.4%.

The main indices had strong increases last week as a result of a variety of largely better-than-anticipated corporate earnings announcements.

After-hours trading on Monday saw a roughly 10% decline in Walmart stock after the retail behemoth cut its earnings projections for the second quarter and the whole year. The retailer said that consumers are spending less on luxuries, notably apparel with larger profit margins.

The Commerce Department is scheduled to provide its first projection of American economic growth for the three months ending in June on Thursday. After production fell by 1.6 percent in the three months ending in March, some economists anticipate a second quarter of decline.

The findings from tech giants Apple, Meta, Microsoft, and Amazon are coming this week as well. Likewise, McDonald’s and Coca-Cola.

On the New York Mercantile Exchange’s computerized trading platform, benchmark U.S. crude increased $1.29 to reach $97.99 a barrel in the energy sector. On Monday, the contract increased $2 to $96.70. The benchmark price for international trade, Brent oil, increased $1.33 to $101.52 per barrel in London. The prior session saw a $1.95 increase to $105.15.

From 136.72 yen on Monday, the dollar dropped to 136.49 yen today. The euro increased from $1.0221 to $1.0230.

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