The markets in Asia are trading firmer at the start of the week.
(Photo: AP)
Tokyo, Shanghai Concerns about interest rates are depressing investor sentiment on Asian stock exchanges. “Investors remain focused on the Fed and the pace at which it is raising rates,” said John Milroy, an expert at Sydney brokerage firm Ord Minnett.
Investors don’t expect the US Federal Reserve to change interest rates at next week’s meeting. However, more and more investors are speculating that a tightening cycle will begin in March. “We believe it will be faster than markets are currently expecting.”
The Tokyo Stock Exchange gave back initial gains on Tuesday. The Nikkei Index ended 0.3 percent lower at 28,257 points. The reversal in sentiment came after two-year US Treasury yields, which are used as an indicator of interest rate expectations, rose above 1% for the first time since February 2020.
“There are fears of more aggressive and faster rate hikes by the Fed,” said Elizabeth Tian, equity derivatives expert at Citigroup. As expected, the Japanese central bank left its interest rate target unchanged, but now expects higher inflation than before. The Tokyo monetary authorities are predicting inflation of 1.1 percent in the new fiscal year from April after 0.9 percent previously.
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The Shanghai stock exchange and the index of the most important companies in Shanghai and Shenzhen rose by around one percent. In Hong Kong and South Korea, on the other hand, the leading indices fell by almost one percent.
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