HONG KONG: Asian markets got some much-needed gains on Thursday after a troubled week, with bargain hunting, positive leads from New York and Europe and promises of further support for the Chinese economy boosting sentiment.
However, traders remained on high alert for a series of crises including the war in Ukraine, soaring inflation, central bank monetary tightening and China’s coronavirus lockdown.
The ongoing earnings season has had mixed results, weighing on tech companies, despite encouraging data from Facebook parent Meta on Wednesday that analysts said could bring some relief to the sector. Apple and Amazon will release later this week.
Traders were also encouraged by a report from state broadcaster China Central Television that officials had pledged to push through more policies to boost employment.
It quoted Premier Li Keqiang as saying on Wednesday that stabilizing the job market was the “key support” to keep economic growth within a reasonable range.
The comments come as unemployment has soared in recent months due to lockdowns in major cities including Shanghai, which have been in place to combat the coronavirus outbreak but have battered economies and threatened the world. increase.
In recent weeks, top officials in Beijing have issued several announcements to boost sentiment. On Tuesday, Xi called for “all-out efforts” to build infrastructure, while the People’s Bank of China has cut the cash reserves banks must hold in order to free up funds for lending.
Vice Premier Liu He promised to stabilize the stock market and support overseas listings.
But investors remain skeptical because officials have so far offered little concrete information on policy, and analysts say the main hurdle for stocks is the leadership’s refusal to abandon efforts to eradicate the coronavirus.
Hong Kong and Shanghai rose in early trade, while Tokyo, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta also rose.
However, “in general, risk assets still have to deal with the consequences of what appears to be an increasingly aggressive tightening of policy by many central banks,” said Rodrigo Catriller of National Australia Bank.
“China’s zero-coronavirus policy remains in place, and the prospect of a protracted conflict between Russia and Ukraine does not bode well for energy prices and energy supplies in Europe.”
BlackRock’s Kate Moore told Bloomberg Television: “The uncertainty factor is the highest we’ve seen in the past few years.
“There are too many headwinds. Against that backdrop, it’s hard to see a big drop in volatility.”
Markets are gearing up for next week’s big event, the Fed’s latest policy meeting, where it is expected to raise interest rates by half a percentage point and signal further sharp hikes throughout the year in an effort to rein in runaway inflation .
The prospect of higher borrowing costs as Japan maintains ultra-easy monetary policy has sent the dollar surging against other currencies, trading near 20-year highs against the yen.
The dollar is also at a five-year high against the euro as the European Central Bank also refuses to follow the hawkish Federal Reserve, while economic worries have also weighed on the euro as Russia cuts off energy supplies to parts of the continent.