Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

Asian stocks rise as China rate cuts offset hawkish Fed outlook

Published 06/14/2023, 11:26 PM
© Reuters.

Investing.com -- Most Asian stocks rose on Thursday, buoyed by the prospect of increased stimulus in China following more rate cuts in the country, although hawkish signals from the Federal Reserve kept a lid on gains.

China cuts rates again as economic indicators disappoint

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.7% and 0.3%, respectively, after the People’s Bank of China (PBOC) cut rates on its medium-term loans.

The move follows a cut in the bank’s short-term loan rates earlier this week, and potentially heralds a cut in the PBOC’s benchmark loan prime rates next week, unlocking more liquidity in the Chinese economy as the government looks to spruce up a slowing economic recovery.

The rate cuts largely offset a raft of weak Chinese economic indicators on Thursday, as data showed industrial production, retail sales, and fixed asset investment all grew at a slower-than-expected pace in May.

Despite a strong start to the year, the Chinese economy has lost momentum in recent months due to weakness in the manufacturing sector and reluctance in private capital to invest in the country.

But the rate cuts point to increased liquidity conditions in Asia’s largest economy, which could provide some near-term support for markets.

Other Asian markets rose tracking this notion, with Hong Kong’s Hang Seng index up 0.7% on its exposure to China. Australia’s ASX 200 also added 0.3% as data showed the country’s labor market remained robust.

Japan’s Nikkei 225 index rose 0.7%, while the broader TOPIX added 0.5%, with both bourses hitting new 33-year highs as stronger-than-expected exports and machinery orders data signaled some resilience in the economy.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Hawkish Fed outlook limits gains, weighs on sentiment

But other Asian markets retreated on Thursday, with South Korea’s KOSPI down 0.3%, while Philippine stocks led losses across Southeast Asia with a 0.6% drop.

Nifty 50 futures for the Nifty 50 pointed to a weak open for Indian stocks, although they hovered just below record highs.

U.S. stocks provided a weak lead-in to Asia after the Federal Reserve kept rates steady on Wednesday, but warned that interest rates could rise at least two more times this year as it moves against high inflation.

The prospect of rising U.S. interest rates bodes poorly for Asian stocks, given that it limits the amount of capital flowing into the region. Worsening economic conditions, as interest rates rise, are also expected to dent sentiment towards risk-driven assets.

Latest comments

fed rate pause in July meeting looks a sure thing. during the live meeting, no member wants to look like a bad human being.
All bad news is offset by good news. There's always a reason to go up in the mind of an ignorant market
What a deliberately deceitful headline.  The fed did not raise rates.  The fed is not hawkish.  Someone report this author to the SEC.
The fact that the FED thinks there could still be two more hikes within the year is a hawkish stance, boo
 No, it really is not.  They said they were not raising rates, THIS TIME, which is the first time they didn't raise rates in many sessions... So, already, the fed is clearly backing off from its previously hawkish stance.  Next off, clearly, Powell cited the situation of BANKS (bank failure crisis) as a reason to delay hikes.  So think that one through.  The banks hold bonds that devalue during rate hikes, and if the fed raises rates, it will harm even more of them.  Powell cited concerns about banks as being an input to his decision.  So, again, think that one through.  Take all the time you need.
read their statements, the fed was very clear .....they are pausing until they see how the present level of interest rates affects the economy, including the banks, and if needed they will consider two more rate hikes this year....
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.