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Asian Stocks Up as Expectations of A Huge Interest Rate Hike Recede

·2 min read

By Zhang Mengying

Investing.com – Asia-Pacific stocks were mostly up on Friday morning as expectations of a 100 basis-point U.S. interest rate hike in July receded.

Japan’s Nikkei 225 jumped 0.61% by 10:29 PM ET (0229 GMT).

South Korea’s KOSPI edged up 0.14%.

In Australia, the ASX 200 fell 1.07%.

Hong Kong’s Hang Seng Index was down 0.56%.

China’s Shanghai Composite was up 0.17% while the Shenzhen Component was up 0.25%.

S&P 500 and Nasdaq 100 edged up after Wall Street shares closed off lows over expectations of a 100 basis-point U.S. interest rate hike in July receded.

U.S. 10-year Treasuries yields dropped two basis points to 2.94%.

The U.S. inflation in June hit a 40-year high, which has stoked expectations of a 100-basis point interest rate hike from the U.S. Federal Reserve.

Recession fears kept crude oil hovering around $96 a barrel.

Greenback strength is “largely a flight to safety,” Standard Chartered Bank head of global G10 FX research Steve Englander told Bloomberg.

“The problem is until we get to see some light at the end of the tunnel with respect to either inflation coming off or oil prices coming off because of supply creation rather than demand destruction, it’s hard to call a top to it.”

In the latest Fed comments, Governor Christopher Waller supported raising rates by 75 basis points this month, though he said he could go bigger if warranted by the data.

St. Louis Fed President James Bullard echoed some of those comments, saying he favored hiking by the same amount.

In Asia-Pacific, data from the National Bureau of Statistics (NBS) showed that China’s gross domestic product (GDP) grew by 0.4% in the second quarter of 2022 year on year as the second largest economy imposed stringent COVID-19 curbs in the second quarter.

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