Asia shares gain ground, hefty Fed rate hike seen priced in
Asian shares climbed on Tuesday following a rebound in the final hour of New York trading on the view that an expected hefty Federal Reserve interest rate hike this week to tackle inflation had been priced into the market.
Even more so than the Ukraine war or corporate earnings, the actions of the U.S. central bank are driving market sentiment as traders position themselves for a rising interest rate environment.
European markets were set for a higher open with pan-region Euro Stoxx 50 futures up 0.37%, German DAX futures adding 0.53% and FTSE futures rising 0.61%. U.S. stock futures, the S&P 500 e-minis , advanced 0.22%.
“Many investors have already fully priced in a rise of 75 basis points at the Fed’s meeting this week,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.
“The market will now pay close attention to the tone of speech coming out of the meeting. As long as the Fed officials don’t deliver strong hawkish remarks, stock markets could (further) rebound.”
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 1.2 % while Australian shares (.AXJO) climbed 1.2%.
In Japan, where trade resumed after a national holiday, the Nikkei (.N225) advanced 0.48% with technology stocks largely driving the climb.
China’s blue-chip CSI300 index (.CSI300) was 0.2% higher while Hong Kong’s Hang Seng index (.HIS) rose 1.2%.
Sentiment in Hong Kong was also boosted after the government flagged that change to its controversial COVID-19 hotel quarantine policy for all arrivals was coming soon, saying it wanted an “orderly opening-up”