Asian markets mixed as rate hike woes offset China tech hopes

Asian markets mixed as rate hike woes offset China tech hopes

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HONG KONG: Asian markets struggled on Tuesday as long-standing fears of soaring inflation and rising interest rates overshadowed hopes that China will loosen its grip on the struggling tech giant.

A surge in U.S. Treasury yields has quelled the sell-off on Wall Street, with the focus now on U.S. and Chinese inflation data this weekend.

Analysts are recommending the Fed raise borrowing costs by half a percentage point in the next three meetings as officials try to rein in runaway prices.

But it caused discomfort on the trading floor as investors worried about the impact on economic growth and corporate profits.

“Inflation concerns aren’t going away anytime soon,” said Fiona Cincotta of City Index. “Rising crude prices and a strong labor report have raised bets that the Fed may need to act aggressively to rein in inflation.”

Stephen Innes of SPI Asset Management added: “Investors are highly focused on inflation, economic growth and future Fed policy.

“Most assumed the worst and believed that a financial tsunami would hit U.S. and global markets thanks to a quorum of U.S. bank CEOs who gave their endorsement to the pessimistic growth narrative. Anything less than this result The results will surprise a lot of people.”

Stocks were mixed in early trade.

Tokyo stocks rose as the yen weakened to a two-year low on expectations the Bank of Japan would not tighten monetary policy as U.S. interest rates climb.

Manila and Jakarta also edged up, but Sydney, Seoul, Singapore, Wellington and Taipei also fell.

Hong Kong fell and Shanghai was flat, although heavyweights Alibaba and JD.com led gains among tech companies after reports that China was close to ending a painful crackdown on ride-hailing app Didi Global and reviving its main app this week. Didi’s U.S.-listed notes surged more than 20 percent.

The Journal added that investigations into two other companies — Full Truck Alliance and recruiting platform Kanzhun — sparked optimism about the industry’s outlook after a prolonged period of intense selling pressure.

“This is seen as a signal that the regulatory crackdown on Chinese tech companies is beginning to end … as China focuses on stabilizing the economy after Covid restrictions,” said NAB’s Tapas Strickland.

Markets have seen some stabilisation in recent weeks as China’s easing of lockdowns has helped offset some of the concerns over rising interest rates and the impact of the war in Ukraine.

But market watcher Louis Navillier warned that there was more volatility ahead.

“If history repeats itself, we could be down tomorrow, then up on Wednesday, then down on Thursday and maybe up on Friday,” he said in comments. “So just get used to these ups and downs because they’ll keep going.

“I would like to caution investors not to get too excited when the market rebounds because it will continue to oscillate. There is so much uncertainty out there.”

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