HONG KONG: Asian shares rose in global markets on Wednesday, as investor worries about the Federal Reserve’s plans to tighten monetary policy eased, while stronger corporate earnings boosted optimism about the outlook.
Analysts are optimistic about the year, although there is still a lot of volatility and uncertainty on the trading floor due to geopolitical tensions and Omicron spreads.
With much of the region still closed for the Lunar New Year holiday, business was thin again, although the open market gained strong buying interest after upbeat performances in Europe and New York.
Tokyo, Sydney, Wellington and Manila all rose more than 1%, while Jakarta rose 0.8%.
After a hot January, world markets have experienced a strong rally over the past three days, with commentators saying the sell-off may have been overdone and traders are buying the dip.
Positive economic data and comments from Fed officials that the bank should be considered in a tightening cycle have boosted positive sentiment, with recent proposals to raise rates by 50 basis points in March seen as too difficult and too early.
Market strategist Louis Navillier said the comments revived the belief that the Fed is still prepared to step in to support markets if they suffer too much.
Still, the idea of five or six rate hikes by 2023 has been touted many times as policymakers struggle to rein in four years of high inflation.
Observers remain optimistic.
“Fed tightening remains the way forward,” said Dennis DeBusschere of 22V Research. “But the near-term rally in equities, led by growth and cyclical stocks, will continue as investors focus on the ‘peak tightening’ narrative ahead of a potentially weak jobs report.”
Carley Garner, founder of DeCarley Trading, told Bloomberg Television that while “stocks may have a little more downside before they bottom out,” she thinks 2022 will still end on a healthy note for investors.
This year, she said, “could be a year of big losses across the board in anything: Treasuries, stocks, commodities, everything.”
Traders are now gearing up for policy decisions from the Bank of England and the European Central Bank later this week, while U.S. jobs data on Friday will provide an update on the world’s largest economy.
Oil prices continued to rise as tensions between Russia and Ukraine fueled supply concerns, adding to expectations that the reopening and recovery of the global economy will spur further improvement in demand.
