Asian Stocks Rally as Bank Fears Ease Ahead of Fed Meeting
Investors piled into discounted financial stocks on Wednesday, easing concerns over a banking crisis and rallying Asian stock markets. All eyes are now on the Federal Reserve’s interest rate decision later in the day.
Japan’s Nikkei 225 was the day’s best performer, rising over 2% as major financial stocks surged. Other bank-heavy indexes also advanced, with Australia’s ASX 200 up 0.9% and India’s Nifty 50 and BSE Sensex 30 indexes up 0.2% each.
Technology-heavy indexes also surged, with Hong Kong’s Hang Seng index up 2.1%, while South Korea’s KOSPI and Taiwan’s Weighted Index rose 0.9% and 1.3%, respectively.
These gains largely tracked overnight gains on Wall Street, as U.S. indexes surged on hopes that the worst of a potential bank crisis was over. Government intervention in the sector, including emergency liquidity measures and mergers, helped increase confidence in the banking sector.
While traders remain uncertain about the Fed’s outlook on monetary policy, with some betting that concerns over pressure on the banking system will limit the central bank’s hawkish stance, markets priced in an over 80% chance that the central bank will hike rates by 25 basis points.
Chinese stocks lagged behind their peers, with the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes only adding about 0.1% each. Investors are seeking more cues on an economic recovery in the country, following middling signals on a rebound. Meanwhile, a meeting between President Xi Jinping and his Russian counterpart Vladimir Putin kept the market on edge.