VOT Research Desk
Nov 2,2022
Market Analytics and Considerations
On Wednesday, the majority of Asian stock markets marginally increased as investors braced themselves for a Federal Reserve interest rate announcement. Meanwhile, Chinese stocks recovered more amid mounting rumors that the nation will relax its tight zero-COVID stance.
As rumors spread on social media that China is considering a full reopening by March 2023, the Shanghai Shenzhen CSI 300 index and the Shanghai Composite index both gained 1.7 percent. Furthermore, a meeting on the subject is anticipated to be held by the nation later this week.
The rumors are a significant source of relief for the beleaguered Chinese markets, which suffered this year when a series of COVID restrictions stopped economic activity.
On Tuesday, bargain buying also contributed to a recovery that saw Chinese stock indexes rise by as much as 3.5 percent. After falling 31 months, the CSI 300 index rose again.
Since Asian economies rely on China as a trading partner, easing COVID lockdowns in China is also beneficial to them. After a rally of more than 5% in the previous session, Hong Kong’s Hang Seng index was the best performer on Wednesday, rising by 2.3%.
Still, officials denied that the zero-COVID policy would be altered. Additionally, just recently, President Xi Jinping had reaffirmed the nation’s determination to uphold the policy.
As investors’ attention shifted to the conclusion of a Federal Reserve meeting later in the day, larger Asian markets began to move higher.I n an effort to restrain stubborn inflation, the central bank is widely anticipated to raise interest rates by 75 basis points.
Although recent data indicating strength in the U.S. economy reduces the likelihood of such a scenario, markets will also be keeping an eye out for any indications from the Fed regarding whether it intends to soften its hawkish stance.
Markets remain divided regarding a December hike of 50 bps or 75 bps.
This year, Asian stocks were heavily impacted by rising U.S. interest rates because higher Treasury yields diminished the appeal of risky assets.
On Wednesday, most Asian markets gained some ground. With a gain of 0.4 percent, Philippine stocks led gains across Southeast Asia. The Taiwan Weighted index gained .5 percent
After data showed that inflation rose more than expected in October, the KOSPI index in South Korea increased by 0.2%. However, the Bank of Korea may be forced to slow down the rate at which it raises interest rates as a result of the economy’s slowdown.
India’s Nifty 50 index lost 0.2 percent, while Japan’s Nikkei 225 lost 0.1 percent.
