Asian stocks make up for recent losses, but the Fed’s jitters keep gains from going higher.
Asian stocks rebounded from their recent losses on Tuesday, retracing an upswing in the final hours of Wall Street, although anticipation of the Federal Reserve meeting this week helped keep gains higher.
Hong Kong’s tech-focused Hang Seng index was the region’s top performer, increasing 1.4 percent and the Australian S&P/ASX 200 index increased by 1.3 percent due to the strength of mining stocks and heavyweight lending.
Wall Street indexes rose overnight after recent losses, with tech stocks leading the way. However, sentiment was shaky prior to the beginning of the 2 day Fed session this Tuesday.
Related: Asian stocks got hit hard by worries about a rate hike and a recession.
It is expected that the U.S. central bank has been widely anticipated to hike rates 75 basis points (bps) however, traders are also looking at the possibility of a 100 bps increase following the more than expected hot U.S. inflation data last week.
The Fed has increased interest rates four times thus to the end of this year, and is likely to announce future hikes, as inflation being pushed to 40-year-highs. Inflation is rising. U.S. interest rates are likely to impact growth in the economy as well as sour confidence in risk-driven assets.
However, the Fed will not be the only one increasing the rate this week. Central banks from Indonesia as well as the Philippines will also be likely to raise rates on Friday, with inflation expected to be upwards across the globe.
The bluechip index of China’s Shanghai Shenzhen CSI 300 index climbed 0.3 percent on Tuesday, trailing its peers in the region following The People’s Bank maintained its prime rate on loans despite sharp drops of the Chinese yuan. The central bank is now faced with the challenge of balancing loosening its monetary policy and also helping in the support of currency, the yuan..
The slowing growth of the economy in China as a result of its zero-COVID stance, has seen the Chinese government implement a variety of measures to boost the growth. However, recent indicators suggest that the Chinese economy faces an extended road to travel before it can reach pre-COVID levels.
The Japan’s Nikkei the 225 index was up 0.4 percent, despite the data indicated that that consumer prices was at a nearly eight-year record in August. The figure indicates rising prices on the economy from rising prices for commodities as well as a slowing of the of the Japanese yen.
Related: After shaky gains on Wall Street, most Asian stocks went up.
The Bank of Japan is scheduled to make a decision on its monetary policy next week. The central bank has not given any indication of its intention to increase the rate of lending from negative levels.
