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Stocks in Asia edged higher and the dollar was little changed as investors weighed hawkish comments from Federal Reserve officials and geopolitical tensions.
A rebound in Chinese shares pushed a gauge of Asian stocks higher, while US futures fluctuated following a decline in the S&P 500 Index on Friday as it slid for a second week.
A report from Goldman Sachs Group Inc. tipping a rebound in Chinese stocks added a counterweight to the flow of news damping appetite for equities. Chinese lenders followed the central bank by keeping their benchmark lending rates unchanged Monday, with analysts expecting possible reductions in coming months to support the economic recovery.
The dollar was steady as it maintained gains against most of its Group-of-10 peers following a weekend that saw no cooling of US-China tensions. Beijing’s top diplomat labeled the American response to the balloon it shot down “hysterical” while his counterpart Antony Blinken said its entry into his nation’s airspace was “irresponsible.” Meanwhile, North Korea test-fired an intercontinental ballistic missile.
Above and beyond this, investors are focused on the shifting outlook for interest rates, with traders fully pricing in quarter-point interest rate increases at the Fed’s next two meetings after policy makers said Thursday that bigger hikes were not out of the question.
Fed officials such as Richmond President Thomas Barkin and Governor Michelle Bowman were the latest to stress the need to keep raising rates to tame inflation. – Bloomberg
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