Most Asian stocks moved in a narrow range on Tuesday as uncertainty over interest rates, especially ahead of a speech by Federal Reserve Chairman Jerome Powell, kept investors on edge.
Regional markets got a moderate signal from a slightly positive close on Wall Street overnight, with the technology sector the only sector to post big gains. U.S. stock index futures were lower in Asian trading ahead of a series of interest rate signals this week.
The ECB president is due to speak at a bank event on Tuesday, while he is due to speak on Wednesday. Key labor market data this week is also due on Friday.
Chinese stocks fall, Hong Kong rises in compensatory trade
Chinese stocks rose slightly on Tuesday after a somewhat positive start to July, but they also suffered sharp losses in June as sentiment about China’s economic recovery deteriorated.
Hong Kong’s index rose in compensatory trade after a holiday on Monday, adding 1.5% as local technology heavyweights tracked gains in their U.S. counterparts.
Some positive private PMI data helped support sentiment towards China this week, as did data showing improved home sales.
But official PMI data over the weekend showed China’s manufacturing sector contracted for the second straight month.
Australian shares fall after hawkish RBA minutes
The Australian dollar index fell 0.4% after a report showed policymakers are considering raising interest rates in the face of rising inflation.
Australian inflation has beaten expectations for three months in a row and remained above the Reserve Bank of Australia’s target range. A continuation of the trend could prompt a 25 basis point interest rate hike in August, UBS analysts said.
Broader Asian markets were largely subdued. Japan’s Nikkei rose 0.3%, while the Tokyo Dome added 0.8%. The Topix index hit its highest level in more than 30 years, amid ongoing bets that Japan’s weak economy will prevent the Bank of Japan from tightening monetary policy dramatically.
South Korea’s consumer price index fell 0.6 percent even as data showed the country’s inflation unexpectedly eased in June.
Indian stocks settle at record levels
The Indian equity index pointed to a somewhat negative opening, as the index is set for some profit-taking after hitting a series of record highs during the month of June.
Optimism about the Indian economy, with the ruling Bharatiya Janata Party poised for a third term in power, helped the Nifty index rise to new record highs in June.
The Nifty has gained 11% so far in 2024, with analysts expecting further gains amid a resilient Indian economy.
