Asian equities mixed as Australia hikes interest rate

Asian stocks were mixed on Tuesday; The Bank of Australia has raised interest rates for the first time since 2010. Shopping was easy for vacationers in closed markets in China, Japan and other countries. The Reserve Bank of Australia raised its policy rate to 0.35% from 0.1%.

Investors are also expecting a further hike in the US Federal Reserve’s interest rate. These and other central banks are accelerating their efforts to contain inflation.

The central bank should double short-term rates to usual levels when it issues the latest announcement on Wednesday. This means that the key interest rate has already been raised once for one day, for the first time since 2018. Wall Street expects significant growth in the coming months.

This makes it more expensive to get a loan – a house, a car, a credit card, which can be debilitating Business. It also leads to stocks investing in other assets when their yields increase. Ultra-low interest rates helped drive unprecedented stock prices during the pandemic. Now this process is reversed.

Asian stocks

The S&P/ASX 200 fell to 7,307.50 and was up 0.5% overall. Stocks also fell in Thailand and Taiwan.

Hang Seng rose 0.9% to 21,278.11.

Kospi was up 0.2% to 2,691.37.

Late Monday afternoon, a rally led by technology stocks kept major indices on Wall Street moderately high. This prevented further losses after a brutal April when large technical selling met important criteria.

The S&P 500 rose to 4,155.38, up 0.6% overall. The Dow rose to 33,061.50, for a total of 0.3%. The Nasdaq rose 1.6% to 12,536.02.

Small company stocks also changed course after spending most of the day in the red.

The Russell 2000 Index rose 1% to 1,882.91. Bond prices fell, leading to higher yields. The 10-year Treasury yield was 2.98% on Monday after rising to 3.00%. It has reportedly not exceeded 3% after December 3, 2018.

A bumpy start in May was followed by an 8.8% decline for the benchmark S&P 500 in April, led by big tech companies that were beginning to become overpriced, largely on the back of soaring interest rates. Only more than half of S&P 500 stocks closed higher in the technology and communications sectors; That’s a big part of moving forward. Chipmakers Nvidia and Meta grew 5.3%.

The broader market often gravitates towards technology supplies. Many companies in the industry have expensive stocks; Consequently, it has more power to move key indexes up or down.

Conclusion

And yet it’s unusual for tech stocks to rise when bond yields rise. Higher yields make bonds a more attractive asset than riskier and more expensive stocks, especially when compared to technology stocks and other growth-oriented companies.

Crude oil prices in the US have risen. European energy ministers meet in Brussels to discuss Russian supply problems and sanctions.

Russia’s invasion of Ukraine has triggered an already sharp rise in oil and natural gas prices. US benchmark crude oil lost 27 cents in electronic trading on the New York Mercantile Exchange; $104.90 a barrel. The barrel rose 48 cents on Monday to $105.17.

Brent oil fell 28 cents to $107.30 a barrel. Growing inflation concerns were driven by the latest round of corporate earnings.

This week will bring more; Pfizer results on Tuesday, CVS Health on Wednesday and Kellogg on Thursday. The dollar was trading at 130.11 Japanese yen in forex trading. The euro rose to $1.0512.

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https://www.financebrokerage.com/asian-stocks-mixed-as-australia-boosts-interest-rate/ Asian equities mixed as Australia hikes interest rate

Callan Tansill

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