Trade of Asia

Markets Bet on Less Hawkish Fed as Bank Rout Eases, Leading to Asian Stock Rise

On Wednesday, most Asian stock markets rose due to a recovery in bank shares, easing fears over a potential crisis in the US, and growing bets that the Federal Reserve will adopt a less hawkish stance, which boosted sentiment.

The Hang Seng index and South Korea’s KOSPI, which were among the worst hit by a stock rout earlier this week, gained the most. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes added 0.4% and 0.7%, respectively, as mixed economic data showed that a recovery in the country was gaining steam. Indian stocks also gained about 0.6% each, following a softer-than-expected wholesale inflation reading for February. Meanwhile, Thailand’s SET Index led gains across Southeast Asia with a 2.2% bounce.


While markets are betting that growing pressure on lenders and signs of overall inflation easing will elicit a less hawkish Fed in the coming months, traders are still positioning for a 25 basis point hike by the Fed next week due to stubborn core inflation, which showed that price pressures remained relatively elevated in the country.

Rising interest rates are expected to limit any major gains in Asian stocks this year as they limit capital flows to the region.


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