Asian markets rise ahead of possible US rate hike

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

The Shanghai Composite Index CN:SHCOMP
rose 0.8% while the Nikkei 225 JP:NIK
in Tokyo as about flat. The Hang Seng HK:HSI
in Hong Kong gained 1.4%.

Alibaba FATHER

HK:9988,
China’s biggest e-commerce company said Tuesday it plans to apply for a primary listing in Hong Kong. The move would make Alibaba a dual-primary listed company on 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 was pursuing another primary listing venue to foster a wider, diverse investor base. That would appear to be mainly mainland Chinese investors.

The Kospi KR:180721
in Seoul added 0.2% and Sydney’s S&P/ASX 200 AU:XJO
was 0.3% higher. Benchmark indexes in New Zealand NZ:NZ50GR
and Taiwan TW:Y9999
slipped, while Singapore SG:STI
and Indonesia ID:JAKIDX
advanced.

Wall Street ended up 0.1% on Monday ahead of this week’s Fed meeting at 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 investor sentiments are split and optimists hope for a “Fed dial back,” said Tan Boon Heng of Mizuho Bank in a report.

Investors worry aggressive rate hikes by the Fed to contain inflation that is at four-decade highs and similar action by central banks in Europe and Asia might derail global economic growth.

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

The US economy is slowing, but healthy hiring shows it isn’t in recession, Treasury Secretary Janet Yellen said Sunday. Fed officials who have publicly supported a rate hike also cite a relatively strong job market as evidence the economy can stand higher borrowing costs.

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

The major indexes are coming off solid gains last week following a mix of mostly better-than-expected reports on corporate profits.

On Monday, Walmart shares WMT
fell nearly 10% in after-hours trading after the retail giant lowered its profit outlook for the second quarter and full year. The company said shoppers are cutting back on discretionary items, particularly clothing, that carry higher profit margins.

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

In energy markets, benchmark US crude CLU22
rose $1.62 to $98.32 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained $2 to $96.70 on Monday. Brent crude BRNU22,
the price basis for international trading, advanced $1.80 to $101.99 per barrel in London. It added $1.95 the previous session to $105.15.

The dollar USDJPY
declined to 136.49 yen from Monday’s 136.72.

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