Stock Market

Asian market recovers after recent losses

The Asian stock market rebounded from recent losses on Tuesday, following Wall Street’s late-session rally, although expectations from the Federal Reserve’s meeting this week held back gains.

Hong Kong’s tech-focused Hang Seng index led the region, climbing 1.4%, while Australia’s S&P/ASX 200 gained 1.3% as credit and mining stocks surged.

On the eve of the index on Wall Street rose, recovering from recent losses; and the shares of technology companies were in the lead. However, sentiment remains fragile ahead of the start of the two-day Fed meeting on Tuesday.

The US central bank is expected to raise interest rates by 75 basis points, although traders are also considering a slight chance of a 100 basis point hike after last week’s higher-than-expected US inflation data.

The Fed has already raised interest rates 4 times this year and is likely to signal more hikes as inflation in the country is at a 40-year high. An increase in the US interest rate is expected to have a negative impact on economic growth, which weakened the sentiment towards risky assets.

But the Fed is not alone in raising rates this week. The central banks of Indonesia and the Philippines are also expected to raise rates this Friday as inflation tends to pick up around the world.

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China’s blue-chip Shanghai Shenzhen CSI 300 rose 0.3% on Tuesday, trailing regional peers, after the People’s Bank of China maintained its prime lending rate amid a sharp depreciation of the yuan. Now the central bank will have to balance between loosening monetary policy and supporting the yuan.

The economic slowdown in China, caused by a policy of zero tolerance for COVID-19, has forced the government of the country to take a series of stimulus measures to spur economic recovery. However, recent indicators suggest that the Chinese economy still has a long way to go before it reaches the level it was before the introduction of this course.

Japan’s Nikkei 225 rose 0.4% even as data showed consumer inflation hit a nearly 8-year high in August. The data show increased price pressure on the economy due to high commodity prices and a weaker yen.

The Bank of Japan is due to make a monetary policy decision this week. But the country’s central bank has given no indication that it plans to raise the lending rate from negative levels.

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