Asian stocks go up because people think China will get better and the Fed will raise interest rates less.
Most Asian stock markets went up on Thursday after the minutes of the Federal Reserve’s December meeting showed that interest rate hikes would be smaller than expected. A slight improvement in Chinese business activity also boosted bets that the economy will get better this year.
The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both went up by 1.8% and 1.3%, making Chinese stocks the best performers in the area. The Hong Kong Hang Seng index rose 0.9% as rumours spread that the border with the mainland would open soon.
China’s manufacturing and service sectors both continued to shrink in December, according to data that came out this week. But the rate of decline slowed down after November, when the country eased some of its strict anti-COVID rules and businesses became much more optimistic about an economic recovery.
At the end of 2022, Chinese markets went up because investors bought heavily discounted stocks on the bet that the world’s second-largest economy would get back to its pre-pandemic levels in 2023.
Still, the country is facing a huge increase in COVID cases after it eased restrictions, which could overwhelm its health care system. Analysts also said that this could make things unstable in the short term and delay a full reopening.
Broader Asian markets went up along with Wall Street. The minutes of the Federal Reserve’s December meeting showed that policymakers support smaller interest rate hikes in the coming months. But the gains were small because policymakers also wanted to keep interest rates high for a longer time. This could hurt regional stocks again in the long run.
After a sharp, sudden rise in U.S. interest rates in 2022, the idea of smaller rate hikes could bring some relief to Asian markets in the short term. Most Asian stock exchanges lost a lot of money for the year.
Taiwan’s weighted index went up by 0.6%. But shares of Apple Inc. (NASDAQ:AAPL) supplier Hon Hai Precision Industry Co Ltd (TW:2317), better known as Foxconn, stayed at a 19-month low after a report that the iPhone maker plans to increase production at Foxconn’s Chinese rival Luxshare Precision Industry Co Ltd (SZ:002475). The stock of Luxshare went up as much as 3%.
Still, the stock prices of Asian Apple suppliers fell this week after news that the U.S. tech giant plans to cut overall production.
The Nikkei 225 index in Japan went up by 0.4% because there was talk that the Bank of Japan might raise its quarterly inflation forecasts because prices are going up in the country.
India’s Nifty 50 and BSE Sensex 30 indexes went against the trend and fell 0.1%. Indonesian stocks fell 1.7%, which was the biggest drop in Southeast Asia.
Stocks in the country fell for the second day in a row after inflation went up more than expected in December. This made people worry about more economic problems and higher interest rates.