Asian Stocks mixed as Australia Boosts Interest Rate
Asian stocks were mixed on Tuesday; The Bank of Australia has raised its key interest rate for the first time since 2010. Shopping was easy for holidaymakers in closed markets in China, Japan, and other countries. The Reserve Bank of Australia raised its benchmark interest rate from 0.1% to 0.35%.
Investors are also expecting another increase in the US Federal Reserve rate. These and other central banks accelerate their efforts to contain inflation.
The central bank should double short-term interest rates to the usual amount when it publishes the latest announcement on Wednesday. This has already increased the key one-day rate once, For the first time since 2018. Wall Street expects some significant growth in the coming months.
This will make it more expensive to get a loan – a house, a car, a credit card, which can weaken the economy. It also results in investments from stocks in other assets as their returns increase. Ultra-low interest rates helped to achieve unprecedented stock prices during the pandemic. Now, this process is reversed.
Asian Stocks
The S&P/ASX 200 fell to 7.307.50, up 0.5% overall. And stocks also plummeted in Thailand and Taiwan.
Hang Seng increased 0.9% to 21,278.11.
Kospi added 0.2% to 2.691.37.
Late Monday afternoon, a rally led by tech stocks left major indexes on moderately high Wall Street. This prevented more losses after a brutal April When extensive technical sales met key criteria.
The S&P 500 increased to 4,155.38, up 0.6% overall. The Dow rose to 33.061.50, for a total of 0.3%. The Nasdaq was up 1.6% to 12,536.02.
Small-company stocks also changed course after spending most of the day in the red.
The Russell 2000 Index rose 1% to 1,882.91. Bond prices fell, resulting in higher yields. The 10-year Treasury yield was 2.98% on Monday, After rising to 3.00%. According to reports, after December 3, 2018, it did not exceed 3%.
The rough start of May was followed by an 8.8% slide for the benchmark S&P 500 in April led by Big Tech companies, Which started to become overpriced, mainly due to sharply increased interest rates. Only more than half of the S&P 500 shares closed higher in the technology and communications sectors; That’s a big part of moving forward. Chipmaker Nvidia and Meta grew by 5.3%.
The broader market often leans in the direction of technology supplies. Many companies in the sector have expensive stock values; Consequently, it has more power to move up or down key indices.
Conclusion
And yet, it is unusual for tech stocks to rise when bond yields rise. Higher yields make bonds more attractive assets than more risky and expensive stocks, Especially compared to stocks of technology and other growth-oriented companies.
The price of crude oil in the US has increased. European energy ministers gather in Brussels to talk about Russian supply issues and sanctions.
Russia’s invasion of Ukraine has sparked an already high jump in oil and natural gas prices. US benchmark crude oil lost 27 cents in electronic trading on the New York Mercantile Exchange; $104.90 per barrel. The barrel rose 48 cents to $105.17 on Monday.
Brent oil fell 28 cents to $107.30 a barrel. Growing concerns about inflation were due to the recent round of corporate earnings.
This week will bring more; Pfizer results on Tuesday, CVS Health Wednesday, And Kellogg on Thursday. The dollar was trading at 130.11 Japanese yen in foreign exchange trading. The euro rose to $1.0512.
