Following minor losses on Wall Street, Asian markets rose on Tuesday, while bond yields modestly decreased as investors looked ahead to this week’s policy meeting of the U.S. Federal Reserve for clues as to what may happen next.
The central bank is almost set to increase interest rates by 75 basis points on Wednesday, but investors will be watching for any signs that the Fed may be considering slowing down rate increases in the future.
The market will pay close attention to Chinese economic activity data this week as well as U.S. jobs data on Friday, in addition to the Fed’s rate decision.
Related: Asian stocks go up as the Fed meeting nears, but China lags behind.
As a significant week of central bank decisions gets under way, “it was a mixed start for risk assets,” wrote ANZ analysts in a note.
The European stock futures, the S& P 500 e-minis ESc1, rose 0.41%, while the German DAX futures rose 0.67% and the FTSE futures rose 0.5%, positioning European markets for a higher open.
MSCI’s largest index of Asia-Pacific equities outside of Japan increased 1.7%, mostly as a result of a recovery in mainland China and Hong Kong stocks.
In afternoon trading, the Hang Seng index in Hong Kong increased by 4.3% while the Hang Seng Tech Index increased by 6.4%.
China’s stock market increased as well, with the blue-chip CSI300 index rising 2.3% after Monday’s 3-1/2 year low.
According to Zhang Zihua, chief investment officer of Beijing Yunyi Asset Management, “some investors’ speculation that Beijing would have to change its rigorous zero-COVID policy in the near future” contributed to today’s market rise in both mainland China and Hong Kong.
“Additionally, a number of IT stocks have recently been trading in Hong Kong at historic lows. Investors considered it to be a wonderful opportunity to invest in them.
In afternoon trading, Australian stocks rose 1.65%, with the mining index leading the gains.
The nation’s central bank reiterated that additional tightening was anticipated on Tuesday despite maintaining a slower pace of interest rate increases for a second month.
On the back of some firms’ positive outlooks and a mixed earnings season, the Nikkei stock index of Japan increased 0.22%.
U.S. equities fell on Monday, as the major indexes finished a robust month of gains on a negative note. The S&P 500 fell 0.75%, the Nasdaq Composite dropped 1.03%, and the Dow Jones Industrial Average fell 0.39%.
U.S. equities rose last month on expectations that the Fed would scale back its programme of aggressive interest rate hikes.
The S&P 500 gained 7.99%, the Nasdaq gained 3.9%, and the Dow gained 13.95%.
The two-year yield, which rises as traders anticipate higher Fed funds rates, touched 4.4555% compared to a U.S. closing of 4.501% on Monday. Overall, U.S. Treasury yields decreased slightly throughout the curve. The benchmark 10-year Treasury note yield was 4.077% at the time of writing, down from 4.274% at the previous U.S. close.
The dollar held steady against the weak Japanese yen at 148.34 yen on Tuesday and increased to $0.991 per euro.
In order to support the yen last month, Japan’s finance ministry reported on Monday that it spent a record $42.8 billion on currency intervention.
The Chinese yuan against the dollar on Tuesday saw a close to 15-year low after the central bank set the official guideline rate at its lowest level since the 2008 global financial crisis.
Related: Asian Stocks Go Up on Hopes for a Fed Pivot, but Australian Stocks Fall
In afternoon trade, the onshore yuan recovered losses and rose to a high of 7.26 per dollar. [CNY/]
Oil prices on the energy market pared some of their early session losses, with U.S. crude rising 0.8% to $87.22 per barrel. A barrel of Brent crude increased to $93.67. [O/R]
Spot gold was somewhat more expensive, trading at $1,638.82 an ounce. [GOL/]
