Asian stocks rise, dollar sways as focus firmly on Federal Reserve’s minutes

Asian equities rise, dollar sways as focus firmly on Fed minutes

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Asian equities rose on Wednesday, while the dollar was on the back foot after a steep spike overnight. Investors were keenly awaiting minutes from the Federal Reserve’s most recent meeting to gauge the path forward for interest rates.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.91%, set for a third straight day of gains for the year. The index fell 20% in 2022. Japan’s Nikkei (.N225) lost 1.12% in early trade, while Australia’s S&P/ASX 200 index (.AXJO) rose 1.28%.

Overnight, Wall Street’s main indexes closed lower with the biggest drags from Tesla (TSLA.O) and Apple (AAPL.O) as U.S. equities make a slow start to the year after their steepest annual losses since 2008 in 2022.

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China’s stocks (.SSEC) opened flat, while Hong Kong’s Hang Seng Index (.HSI) opened roughly 1% higher. Investors have pinned their hopes on a swift post-COVID era recovery in China after the country started dismantling strict curbs.

“The market has made a pretty tentative start to the year … (and) is still grappling with the notion of what we are going to see from the Fed this year,” said Rob Carnell, head of ING’s Asia-Pacific research.

“There are two camps out there, and they are wrestling for dominance in terms of the view. Some days higher-for-longer wins, some days higher-then-lower camp wins,” Carnell said.

Minutes from the Fed’s December meeting, when it cautioned rates might need to remain higher for longer, are due to be released later on Wednesday.

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Investors will parse the minutes to determine whether more policy tightening is likely.

Markets are pricing in rate cuts for late 2023, with fed fund futures implying a range of 4.25% to 4.5% by December.

“It is too early to start betting on a Fed pivot this year, and that should make this difficult environment for stocks,” said Edward Moya, senior market analyst at Oanda in New York.

In the currency market, the euro was up 0.14% to $1.0561 in early Asian hours, not far off its three-week lows of $1.0519 it touched overnight. A surprise slowdown in German inflation rallied bunds, sending the familiar currency sliding.

The dollar index, which measures the greenback against six other currencies, fell 0.162% after rising 1% overnight. Sterling last traded at $1.1983, up 0.14% on the day. The pound fell 0.7% overnight.

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The yield on 10-year Treasury notes was down 5.7 basis points to 3.735%, while the work on the 30-year Treasury bond was down 4.5 basis points to 3.846%.
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Benjamin noha
About Benjamin Noah 169 Articles
Benjamin is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for web-based technologies and gadgets and focus on writing about Web Trends, Smartphones, and Tablets.