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Most Asian stocks rose yesterday after China again indicated looser monetary policy is on the way and bond traders dialled back aggressive bets on Federal Reserve interest-rate hikes.
An Asia-Pacific equity gauge climbed a second day as Japan and China pushed higher. US and European equity futures edged higher following a tech-sector rally that helped Wall Street snap a three-day drop.
China is expected to cut a key policy interest rate for the second time this year on Friday and reduce the reserve requirement ratio soon — the nation’s cabinet has strongly signalled the latter as Covid-19 lockdowns sap the economy.
“We have actually turned cautiously optimistic on the Chinese equity market in April already,” Stefanie Holtze-Jen, Asia-Pacific chief investment officer at Deutsche Bank in Singapore, said on Bloomberg Television. “We perceived the communication from the government as the line in the sand.”
Outside of China, monetary settings continue to tighten in the campaign to curb the cost of living. South Korea raised its key interest rate and Singapore further tightened policy, spurring advances in their currencies.
Shorter maturity Treasuries extended a climb that suggests investors are rethinking just how far the Fed will hike rates. Some moderation in the core US consumer-price measure has spurred speculation inflation is peaking, though a record producer-price print cautions against quick judgments.
The commodity-fuelled jump in costs exacerbated by Russia’s war in Ukraine continues to ripple across the global economy and color market sentiment. JPMorgan Chase chief executive officer Jamie Dimon said inflation and the conflict were creating “significant” challenges. The firm was among the first of the big US banks to report earnings.
“We’re still being cautious” about equities, Michael Vogelzang, chief investment officer at CAPTRUST, said on Bloomberg Television. “We think there’s still a lot more that can go wrong than probably can go right.”
Elsewhere, the yen bounced from a two-decade low against the dollar. The greenback extended a drop after snapping its longest winning streak since 2020. Oil held most of a rally to about US$104 a barrel on supply concerns.
The latest developments over the war include a European Union warning for member states that President Vladimir Putin’s demand that “unfriendly countries” effectively pay for Russian gas in roubles would violate sanctions.
The US will expand the scope of weapons it’s providing to Ukraine in a new US$800 million package of military assistance. – Bloomberg
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