HONG KONG Asian shares rose on Tuesday after an increase in the last half hour New York trading on the assumption that the expected massive Federal Reserve interest rate hike this week to combat inflation was already priced into the market.
More so than the Ukraine war or earnings of corporations The decisions by central bankers at the U.S. central bank are setting the mood for markets as traders make plans for a higher interest rate.
European markets were set for a more positive open , with pan-regional euro-stock 50 futures in the upward direction of 0.37 percent, German DAX futures increasing 0.53 percent as well as FTSE Futures increasing 0.61 percent. U.S. stock futures, the S&P 500 E-minis gained 0.22 percent.
Related: Asia stocks wobble into September as the dollar surges.
“Many investors have already fully priced in a rise of 75 basis points at the Fed’s meeting this week,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.
“The market will now pay close attention to the tone of speech coming out of the meeting. As long as the Fed officials don’t deliver strong hawkish remarks, stock markets could (further) rebound.”
MSCI’s largest index of Asia-Pacific shares that are not in Japan has risen 1.2 percent while Australian shares gained 1.2 percent..
In Japan the trade reopened following a holiday, it was reported that the Nikkei gained 0.48 percent, with tech stocks driving the increase.
The blue chip index of China’s CSI300 index rose 0.2 percentage higher than the Hong Kong’s Hang Seng index increased 1.2 percent.
The mood of the people in Hong Kong was also boosted when the Hong Kong government announced that a an amendment to the COVID-19 hotel quarantine rule for all guests was expected shortly, stating that it would like the policy to be changed in an “orderly opening-up”.
On Monday it was reported that markets like the S&P 500 and the Nasdaq Composite recovered after recording their biggest weekly percentage decline since June, when markets were completely priced for an increase in rates of at 75 basis points or more at the conclusion of the Fed’s September. 20-21 meeting.
The S&P 500 increased by 0.69 percent, while the Nasdaq gained 0.76 percent, and it was the Dow Jones Industrial Average gained 0.64 percent.
Markets are pricing rates that could rise up to 4.5 percent by 2023’s beginning in comparison to the current 2.25%-2.5 percentage range for policy rates.
The rising interest rates have led to an evaporation of bonds issued by the government. The yield on the benchmark 10 year Treasury Notes was 3.4848 percent, following a peak of 3.518 percent on Monday, the highest since April 2011.
The yield for two years, a gauge of inflation expectations, was at 3.9473 percent, after climbing to a new close to 15-year-high of 3.970 percent.
It’s not only that in United States that interest rate increase are likely. A majority of central banks that meet this week all the way all the way from Switzerland up to South Africa – are expected to raise rates, with markets divided about what the Bank of England will move either by fifty or 75 basis points.
China’s central bank took it on in its own direction it cut on Monday repo rates to 10 basis point in order to aid its struggling economy.
Related: Asian stocks make up for recent losses, but the Fed’s jitters keep gains from going higher.
The other one could be another exception: the Bank of Japan, also scheduled to meet next week and that hasn’t shown any sign of easing its extremely-easy yield curve policy despite a dramatic decline into the currency yen.
More favorable U.S. Treasury yields have contributed to strengthening the dollar, making gold less appealing.
The dollar index is a measure of the currency’s value against six other currencies in the market, was 0.046 percent higher at 109.59. This is the New Zealand dollar, which is a sensitive indicator of global growth outlook, slipped 0.5 percent to its lowest level since May 2020. $0.5923.
Gold was somewhat lower. Gold spot was trading at $1,671.93 per one ounce. [GOL/]
U.S. crude climbed 0.03 percent to $85.76 per barrel. Brent crude was up from $92.12 each barrel.
