Hong Kong, June 8 (BNA): Asian stocks rose on Wednesday, encouraged by the recovery in Wall Street, but gains were kept in check on concerns that aggressive central bank policy tightening will stifle global growth and raise the risks of stagflation.
The World Bank, on Tuesday, cut its global growth forecast by about a third to 2.9% for 2022, warning that the Russian invasion of Ukraine has compounded the damage caused by the Covid-19 pandemic, and that many countries are now facing a recession, according to Reuters reports.
However, US stocks rose to close higher for the second day in a row, bolstering the mood in Asia.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.15%, recovering most of its losses in the previous session, while Japan’s Nikkei 225 rose 1%.
Australia’s S&P/ASX 200 rose 0.72%, reclaiming half of its decline on Tuesday after the central bank unexpectedly raised interest rates by more than 22 years and announced more tightening ahead.
India’s central bank is also expected to raise interest rates later today (0430 GMT) in an effort to tame hot rates, with further increases pricing.
On Thursday, the European Central Bank meets and markets expect it to at least lay the groundwork for rapid rate hikes, if not start with a small one.
“I think the increases coming from central banks, or front loading is actually positive because it will allow us to curb inflation somewhat,” said Trine Nguyen, chief economist at Natixis in Hong Kong, adding that markets could correct from Tuesday’s “exaggeration” .
“But I wouldn’t say it’s a reversal unless changing the data tells us otherwise,” Nguyen said.
U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expects inflation to remain elevated and the Biden administration is likely to increase its inflation forecast by 4.7% for this year in its budget proposal.
Chinese stocks received a boost from hopes that its economy is slowly getting back on track as the strict COVID-19 lockdown is eased. Hong Kong’s Hang Seng Index is up 1.22%, while China’s benchmark CSI300 Index is up 0.47%.
“The rebound in risk sentiment is due to a more positive bias in China where expectations are set to increase as Covid restrictions ease, and state-owned banks are required to increase lending again,” said Stephen Innes, managing partner at SPI Asset Management. in a note.
In currencies, the yen hit a new 20-year low against the dollar at 133 and slipped to a seven-year low against the euro as traders await the European Central Bank meeting, which is likely to leave Japan alone among its major peers in holding on to super trading. Easy monetary policy.
The US Federal Reserve is expected to raise its benchmark funds rate by 50 basis points next week and again in July.
The benchmark US 10-year yield was 2.992%, having fallen from a four-week high of 3.064% on Tuesday after Target Corp warned of excess inventory and said it would cut prices, providing some relief to those who think inflation may be in its climax.
Brent crude futures rose 0.11 percent to $120.72 a barrel, and US Brent crude futures rose 0.23 percent to $119.66.