© Reuters. FILE PHOTO: Passers-by wearing protective face masks walk past an electronic board showing the world stock index, in the midst of the coronavirus disease pandemic (COVID-19), in Tokyo, Japan November 1, 2021. REUTERS / Issei Kato
By Scott Murdoch
MELBOURNE (Reuters) – Asia’s stock markets were mostly higher on Tuesday, though global investors’ attention remains focused on the prospect of US rate hikes over the next few months, after two years of unprecedented pandemic-induced political easing.
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.4% after the US market closed overnight due to the Martin Luther King Jr. holiday. The index has risen 1.1% so far this month.
Australian stocks rose 0.29% while the blue chip CSI300 index in China rose 0.33% in early trading.
Hong Kong rose 0.61%.
The stock index traded 0.63% higher ahead of the Bank of Japan decision between 0230-0500 GMT.
The Bank of Japan is not expected to change its stance on ultra-low interest rates, but its inflation forecasts are likely to increase for 2022.
Prior to the result of the meeting, the dollar traded against the yen at 114.51. It is still a bit from its lowest this year at 113.49 last week.
The US Federal Reserve is due to meet on 25-26. January, and although it is not expected to change interest rates thereafter, a growing number of investors believe that March will be the start of a tightening cycle.
Interest rate increases are generally seen as negative for more risky assets such as equities.
“Investors’ focus remains on the Fed and the pace at which they are raising interest rates,” John Milroy, an adviser at Sydney’s broker Minn Ordett, told Reuters.
“We think it will be faster than the markets are currently expecting. There is still a boom in the US with a tight labor market. Good for world growth but contributing to inflationary pressures.”
The outlook for higher US interest rates also unfolded in fixed income markets on Tuesday, after the US market closed on Monday.
In trading on the Asian cash market on Tuesday, two-year interest rates rose above 1% for the first time since February 2020.
Two-year interest rates follow short-term interest rate expectations and were last up 3.7 basis points (bps) to 1.0054%.
Five-year interest rates rose 3.6 bps to 1.5960%, the highest since January 2020. Benchmark 10-year interest rates rose about 2 bps to 1.8108% in early Tokyo trading.
The one that follows the dollar against a basket of currencies from other major trading partners was up 95,254.
rose 0.49% to $ 84.23 per share. barrel. rose to $ 86.53 per. barrel.
Gold was a little lower. traded at $ 1,818,2274 per. ounce. [GOL/]
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