Asia’s major indexes posted some minor gains on Wednesday but the gloomy global picture and China’s persistent Covid problem continued to cast a shadow over trading floors.
It was a low volume day with Japan’s markets closed for a public holiday and investors elsewhere cautious ahead of the release of minutes from a key US Fed meeting later on Wednesday.
Observers will be looking for any sign of discussions about moderating the pace of interest rate hikes which have seen the US dollar surge in strength, hurting many of Asia’s leading currencies.
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MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%, buoyed by gains in US stocks overnight. The index is up 12% so far this month.
The Hang Seng Index gained 0.57%, or 99.40 points, to close at 17,523.81 while China’s CSI300 Index was down 0.2% in early trade.
China reported 29,157 new Covid infections for November 22, compared with 28,127 new cases a day earlier. Case numbers in Beijing and Shanghai are steadily rising, and remain high in several major manufacturing and export hubs, prompting authorities to close some facilities.
“The biggest story for investors in Asia is still the China reopening,” said Suresh Tantia, Credit Suisse’s senior investment strategist in Singapore.
“We had seen China markets rally up to 20% but those expectations are being dialled back. We think a reopening will be a slower process and will not be done in a hurry. That means a lot of investors are trimming their exposure, cutting their losses or booking any profits they might have made on China.”
The Shanghai Composite Index rose 0.26%, or 7.96 points, to 3,096.91, while the Shenzhen Composite Index on China’s second exchange dropped 0.34%, or 6.88 points, to 1,995.51.
Elsewhere across the region, Australian shares were up 0.63%, led by mining and resources giants.
Indian stocks were up too with Mumbai’s signature Nifty 50 index rising 0.05%, or 9.20 points, at 18,253.40.
Globally, European equities looked set to follow Asia higher, with the pan-region Euro Stoxx 50 futures up 0.33%, Germany’s DAX futures up 0.27% and FTSE futures up 0.16%. US stock futures, the S&P 500 e-minis, slipped 0.07%.
New Zealand’s central bank raised interest rates by 75 basis points – its largest ever move – to a near 14-year high of 4.25% and flagged more hikes are on the way as it struggles to contain stubbornly high inflation.
The US’s November consumer price index will be published on December 13, the day before the central bank delivers its final interest rate decision for 2022.
“The Fed is going to be very data driven and they are will need to see more than one softer inflation result because one weaker month in October is not a trend,” said Clara Cheong, JPMorgan Asset Management investment strategist.
“If November shows inflation cooling, we still think the Fed will raise by 50 basis points rather than less or showing any signs they are starting a pivot.”
In Asian trading, the yield on benchmark 10-year Treasury notes rose to 3.7578% compared with its US close of 3.758% on Tuesday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.5144% compared with a US close of 4.517%.
Oil failed to hold on to earlier gains during the Asian session. It had risen initially after top exporter Saudi Arabia said OPEC+ would maintain output cuts and could take further steps to balance the market.
Gold was slightly lower. Spot gold was traded at $1734.35 per ounce while the FTX exchange collapse continues to roil cryptocurrency markets. Bitcoin was up 2.2% in Asian trading hours to $16,482.
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index > UP 0.57% at 17,523.81 (close)
Shanghai – Composite > UP 0.26% at 3,096.91 (close)
London – FTSE 100 > UP 0.48% at 7,488.63 (0935 GMT)
New York – Dow > UP 1.18% at 34,098.10 (Tuesday close)
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