Asian markets rise ahead of possible US rate hike

BEIJING — Asian stock markets were mostly up on Tuesday as investors braced for another sharp interest rate hike by the Federal Reserve to calm inflation.

The Shanghai Composite Index SHCOMP,
+0.83%
rose 0.8% while the Nikkei 225 NIK,
-0.16%
in Tokyo as roughly flat. The Hang Seng HSI,
+1.85%
in Hong Kong gained 1.4%.

Alibaba BABA,
+0.45%

9988,
+5.32%,
China’s largest e-commerce firm announced on Tuesday that it plans to apply for a primary listing in Hong Kong. The move would make Alibaba a listed company on both the New York Stock Exchange and the Hong Kong Stock Exchange.

Alibaba went public in New York in September 2014 and completed a secondary listing in Hong Kong in November 2019.

CEO Daniel Zhang said the company is looking for an alternate primary listing venue to foster a broader and more diverse investor base. It would seem that these are mainly mainland Chinese investors.

The Kospi 180721,
+0.39%
in Seoul added 0.2% and the S&P/ASX 200 XJO in Sydney,
+0.26%
was 0.3% higher. Benchmarks in New Zealand NZ50GR,
-0.29%
and Taiwan Y9999,
-0.87%
slipped, while Singapore STI,
+0.23%
and Indonesia JAKIDX,
+0.14%
Advanced.

Wall Street ended up 0.1% on Monday ahead of this week’s Fed meeting in which officials are expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin. That would put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest since 2018 before the coronavirus pandemic.

Mixed market reactions suggest investors’ sentiments are mixed and optimists are hoping for a “recall from the Fed,” Mizuho Bank’s Tan Boon Heng said in a report.

Investors fear that aggressive rate hikes by the Fed to contain inflation that is at its highest level in four decades and similar action by central banks in Europe and Asia could derail the global economic growth.

US inflation accelerated to 9.1%, its highest level since 1981.

The U.S. economy is slowing, but healthy hiring shows it’s not in a recession, Treasury Secretary Janet Yellen said Sunday. Fed officials who have publicly backed a rate hike also cite a relatively strong labor market as evidence that the economy can withstand higher borrowing costs.

On Wall Street, the S&P 500 SPX,
+0.13%
advanced to 3,966.84 on Monday. The Dow Jones Industrial Average DJIA,
+0.28%
rose 0.3% to 31,990.04. The Nasdaq Composite COMP,
-0.43%
fell 0.4% to 11,782.67.

Major indexes posted strong gains last week after a mix of mostly better than expected corporate earnings reports.

On Monday, Walmart shares WMT,
-0.14%
fell nearly 10% in after-hours trading after the retail giant lowered its second-quarter and full-year profit outlook. The company said shoppers were cutting back on discretionary items, especially apparel, which generate higher profit margins.

On Thursday, the Commerce Department is due to release its first estimate of US economic growth in the three months ending in June. Some forecasters are expecting a second quarter contraction after output fell 1.6% in the three months to March.

On the energy markets, crude US reference CLU22,
+1.48%
rose $1.62 to $98.32 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2 to $96.70 on Monday. Crude Brent BRNU22,
+1.36%,
the price basis for international trade, advanced $1.80 to $101.99 a barrel in London. It added $1.95 the previous session at $105.15.

The dollar USDJPY,
-0.06%
fell to 136.49 yen from 136.72 on Monday.

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