Asian markets climb as calm returns after strong selling

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Hong Kong (AFP) – Shares rose in Asia on Tuesday as some stability returned to markets after last week’s turmoil, but analysts warned of further difficulties for traders after central bank officials said referring to further interest rate hikes to curb inflation.

Although there was no catalyst from Wall Street due to a bank holiday, strong performance across Europe provided a small boost, while bargain buying also provided A support.

However, there remains a general feeling of gloom as traders speculate that sharply rising borrowing costs around the world will tip economies into recession.

This week’s focus is on Federal Reserve chief Jerome Powell’s two days of testimony before lawmakers in Washington, who will be closely watched for insight into the bank’s thinking and possible clues to its plans for tackling price spikes.

The Fed announced a three-quarter point hike last week after inflation data days earlier shattered forecasts and hit a four-decade high.

“While (investors don’t expect) Powell to reinvent the political wheel, we might expect him to reinforce the idea that the Fed is in data-driven mode,” said Stephen Innes of SPI Asset Management.

“As a result, any shift in Fed rhetoric will be a function of incoming data, which is now virtually all event risk. From this perspective, further evidence of persistent inflation will trigger political panic, while any sign of slowing growth will confirm the recessionary story.

“None suggests that now is the time to board the rally wagon.”

At the start of trading, Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta all rose.

“There could be a narrative that we’ve bottomed, we’re oversold, the Fed takes inflation seriously and it could be slightly bullish in the meantime,” Optimal Capital’s Frances Stacy told Reuters. BloombergTV.

However, as the volatility of the past week has subsided, banks’ intention to continue raising rates could cause further turbulence.

Several officials – including the Fed, Bank of England, Reserve Bank of Australia and European Central Bank – have come out in recent days to signal further tightening in borrowing costs.

In commodity markets, oil extended its gains as traders rallied after Friday’s plunge fueled by worries about a possible recession.

Gains were helped by optimism of an increase in demand as China gradually emerges from its period of Covid confinement, while the summer driving period in the United States resumes.

Key figures around 02:30 GMT

Tokyo – Nikkei 225: 1.8% up at 26,225.15 (pause)

Hong Kong – Hang Seng Index: UP 1.1% to 21,392.60

Shanghai – Composite: UP 0.1% to 3,319.07

Euro/dollar: UP at $1.0534 vs. $1.0528 on Monday

Pound/dollar: UP to $1.2269 from $1.2243

Euro/pound: DOWN to 85.86 pence vs. 86.02 pence

Dollar/yen: UP to 135.10 yen from 135.06 yen

West Texas Intermediate: UP 2.2% to $112,012

North Sea Brent: 1.6% up to $115.91 a barrel

London – FTSE 100: 1.5% up to 7,121.81 points (closing)

New York – Dow: DOWN 0.1% to 29,888.78 (closing)