Sat, March 02, 2024

Despite Fears Over China COVID, Asian Equities Rise

Stocks in Asia

China was an exception as dismal data signaled additional pressure on the COVID-hit economy, but Asian equities rode a global rebound on Thursday, enjoying wide gains as oil prices stabilized at lower levels only seen previous to the Russian-Ukraine War.

Despite an anticipated ECB rate rise and concerns about an energy crisis, futures markets indicated that the surge would continue in Europe later in the afternoon. FTSE futures up 0.09%, while Euro Stoxx 50 futures increased by 0.4%. As domestic exporters benefitted from the cheaper yen, Japan’s Nikkei share average increased by 2.18%, passing above the 28,000 psychological barriers for the first time this month.

The S&P/ASX 200 index in Australia increased by 1.63% while MSCI’s broadest index of Asia-Pacific equities ex-Japan increased by 0.57%. However, Chinese blue chips dropped 0.12% following the publication of weaker-than-anticipated trade statistics on Wednesday and the prolonging of the lockdown in Chengdu, showing that the nation’s rigorous zero-COVID policy is still in force.

 

What Do Experts Predict for Asian Equities?

 

According to Gary Ng, senior economist at Natixis in Hong Kong, today for Asia it’s mainly a story of whether zero-COVID will continue to influence the Chinese economy. The Hang Seng index in Hong Kong decreased by 0.35%.

As bond rates decreased overnight, all three of the main Wall Street indexes had big gains. Markets are watching for any indications of a change in the Federal Reserve’s aggressive stance toward combating inflation in Chairman Jerome Powell’s address later today. According to NatWest Markets analyst Jan Nevruzi, Powell will imply that the decision for September hasn’t yet been taken, but the Fed will remain data reliant.

Expectations for a third consecutive 75-basis-point interest rate rise are presently at roughly 76%, up from 69% a week ago, according to CME Group’s (NASDAQ: CME) Fedwatch tool. In the short term, the markets will likely adopt a wait-and-see strategy whether it’s 50 or 75 basis points will matter, but what matters most is whether inflation can peak and what the Fed’s path is for future rate hikes.

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