Asian Stocks Rise Higher; Inflation Worries Still Here
Asian stocks rose on Tuesday morning. Positive economic data and signs of easing Sino-US tensions offered some respite to the recent sell-off. However, the constant fear of global recession and high inflation kept most buyers away. MSCI’s standard of Asia Pacific shares outside Japan increased 0.3%. This wiped out some of the early morning gains. The index has fallen by 16% this year. Concerns that central banks around the world are pushing economies into recession in an effort to break runaway inflation sent investors scrambling for cover.
A brief respite from jittery markets was a report that the US president is leaning toward a decision to ease tariffs on goods from China in an effort to slow inflation. However, Chinese stocks were volatile. Accordingly, it gave up early gains, with blue chips last down 0.6%. Positive data was also reported from Japan. Activity in the nation’s services sector expanded at the fastest pace in eight years in June. The easing of coronavirus restrictions boosted sentiment in businesses such as tourism. That helped push the Nikkei up 0.8%. According to experts, market participants are still assessing the impact of the conflict between inflation; which is at a constantly elevated level—also, and signs pointing to a potential US recession.
Stocks and Inflation
There was concern in South Korea, where inflation in June hit the fastest pace since the Asian financial crisis. That fueled expectations that the central bank could raise rates by 50 basis points for the first time next week to cut rates. Australia’s central bank meets with analysts this afternoon. They expect another 50 basis point rate hike to moderate inflation.
US markets ended overnight for the July holiday. US stock futures rose in Asian trade. The revenue of the country’s exchequer came back higher from the vacation. The yield on benchmark 10-year notes was 2.9686%. However, it could not exceed the symbolic level of 3%. Brent crude futures rose 0.4%. The total reached $113.92 after a 2.4% increase on Monday. A beat in Norway may disrupt gas and oil production. This leads to strict delivery concerns. Spot gold traded at $1,809.2 per ounce. This reduced Monday’s loss.
Tokyo stocks rose on Tuesday. Investor sentiment rose in hopes of higher returns on export-oriented issues; Since the yen fell slightly against the US dollar. The 225-issue Nikkei Stock Average ended Monday at 26,423.47, up 269.66 points, or 1.03 percent. The Topix index increased to 1,879.12 points. In the top-tier Prime Market, gainers led mining, insurance, and electrical issues.
The CSI300 index was down 0.4% at the lunch break. And the Shanghai composite index decreased by 0.2%. Sentiment in China has been dampened by signs of worsening COVID-19 infections. Although data showed that China’s services activity experienced a three-month decline in June. It also grew at the fastest rate in almost a year. The total number of reported cases in the country jumped to 173 on a seven-day moving average basis. And the number of cities under lockdown or partial lockdown has doubled.
Last week, the COVID-19 position has worsened. Another wave of omicrons can lead to a return to the down phase; Although the timing of such an event is uncertain. Tourism and food and beverage stocks fell in China. Stocks of steel, resources, and infrastructure have increased. China will reportedly set up a state-owned infrastructure investment fund worth US$74.69 billion to boost infrastructure spending and to revive the outdated economy. Hong Kong-listed shares of WuXi Biologics rose 8%. The Chinese company is one step closer to being removed from the US trade list, which it was placed on five months ago.
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