Asia’s stocks rose on Wednesday, encouraged by a rally on Wall Street. But worries kept gains in check that aggressive central bank policy tightening will stifle global growth. Therefore, raising the risks of stagflation. The World Bank on Tuesday slashed its global growth forecast by nearly a third, to 2.9% for 2022. Russia’s invasion of Ukraine has compounded the damage from the COVID-19 pandemic, and many countries now face recession. Nevertheless, U.S. stocks rallied to end higher for a second straight day, buoying the mood in Asia.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.9%. This narrows the morning gains while recouping most of the losses in the previous session. Japan’s Nikkei 225 index was up 0.8%.
Japan’s economy shrank slightly in the first quarter, as private consumption remained resilient and companies rebuilt inventories. Gross domestic product in the world’s third-biggest economy contracted by 0.1%, beating median market expectations for a 0.3% drop.
Australia’s S&P/ASX 200 index (AXJO) rose 0.37%, recovering part of its slide on Tuesday. Thereafter, the central bank unexpectedly raised interest rates by the most in 22 years and flagged more tightening to come. Elsewhere, the Reserve Bank of India’s (RBI) key interest rate rose by 50 basis points on Wednesday.
U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expected inflation to remain high. And the Biden administration would likely increase the 4.7% inflation forecast for this year in its budget proposal.
Chinese stocks pared back earlier gains in morning trading and dipped 0.03%. Investors remain cautious about the outlook for the economy’s getting back on track as strict COVID lockdowns look relaxed. Meanwhile, shares in Hong Kong support regulatory easing in Beijing, with tech companies advancing on policy relaxations. The Hang Seng Index recorded a 2% hike, with the Hang Seng Tech Index also rising 4%.
The U.S. Federal Reserve is to raise its benchmark funds rate by 50 basis points next week and again in July. U.S. West Texas Intermediate crude for July was at $120.09 a barrel, up 66 cents, or 0.55%. Thereafter, it reached its highest settlement since March 8 in the previous session.
-Reuters.
