Thursday, March 28

Asia gains ahead of expected Fed hike, China COVID concerns ebb


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Most emerging Asian stock markets

advanced on Wednesday, buoyed by a pull-back in COVID-19 cases

in China and hopes of progress in Russian-Ukraine peace talks,

though traders held off on big bets before the US Federal

Reserve’s rate decision.

Equities in Thailand and South Korea climbed

0.8% and stocks in Singapore rose more than a percent to

a two-week high.

Currencies also edged higher, with the Thai baht

and Malaysian ringgit each firming 0.2%.

The gains followed a relief rally on Wall Street overnight,

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driven by hopes of a resolution to the conflict in Ukraine.

Ukrainian President Volodymyr Zelenskiy said on Wednesday peace

talks with Russia were sounding more realistic but more time was

needed.

Moves in Asia were still cautious ahead of a closely watched

Fed rate decision later in the day (1800 GMT). Markets have

already priced in a 25 basis points rate hike and will look for

further policy clues in light of surging inflation and volatile

commodity prices following Russia’s invasion of Ukraine.

“Considering the risks around oil prices, Asia inflation and

developed markets monetary tightening, the risks are skewed

towards Asia central banks turning more hawkish ahead,” said

Duncan Tan, a rates strategist at DBS Bank.

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“A hawkish tilt is more likely in economies where recent

inflation prints have climbed or stayed above central bank

targets,” Tan said, pointing to Thailand and India as examples.

“Comparatively, for Bank Negara Malaysia and Bank Indonesia,

inflation appears to be better anchored and thus, these are less

pressures and urgency for them to pivot.”

Regional markets also steadied as a drop in daily COVID-19

cases in mainland China aided sentiment.

Shares in Indonesia were last up 0.6%, after

climbing nearly a percent earlier, and the rupiah edged

up 0.2%.

The country’s finance minister said the economy had remained

resilient in the face of increased volatility due to the war in

Ukraine and vowed to protect people from an “extreme” rise in

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food prices.

Bonds in the region remained under pressure, having taken a

beating last week when surging commodity prices raised inflation

risks, with yields on high-returning Indonesian benchmark bonds

rising 32 basis points to 6.766%.

HIGHLIGHTS:

** Top gainers on the Singapore STI include United

Overseas Bank Ltd up 3.5% and Yangzijiang Shipbuilding

Holdings Ltd up 2.29%

** Top gainers on the Jakarta stock index include

Victoria Investama Tbk PT up 25.48% and Tanah Laut Tbk

PT up 23.42%

Asia stock indexes and currencies

at 0432 GMT

COUNTRY FX RIC FX FX INDE STOCKS STOCKS

DAILY % YTD % X DAILY YTD %

%

Japan +0.08 -2.63 <.n2>

China EC>

India +0.36 -2.63 <.ns ei>

Indonesi +0.10 -0.42 <.jk a se>

Malaysia +0.17 -0.81 <.kl se>

Philippi +0.04 -2.49 <.ps nes i>

S.Korea 11>

Singapore +0.12 -1.09 <.st e i>

Taiwan -0.15 -3.42 <.tw ii>

Thailand +0.09 -0.27 <.se ti>

($1 = 14,316.0000 rupiah)

(Reporting by Riya Sharma; Editing by Kim Coghill)

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