HONG KONG, June 21 — Asian stocks and US share futures turned higher today as the market took stock after a recent steep selloff, but concerns remain that aggressive central bank rate hikes to curtail inflation could spark a global recession.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.85 per cent in early trading, edging up from a more than five-week low hit the previous day.
Japan’s benchmark Nikkei average opened up 1.16 per cent, and Nasdaq and S&P500 e-mini share futures ESc1, NQcv1 each rose nearly 1.5 per cent.
“I think the green that we’re seeing this morning is not necessarily a function that people are moving back in towards risk assets,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
“It’s just the normal behaviour on the very large selloff to get some reprieve and breathing space come through because fundamentally, nothing has changed on the macro front last week.” Chinese blue chips rose 0.5 per cent.
Central banks around the world are looking to raise interest rates aggressively to curb rising inflation, a sentiment underscored today by Reserve Bank of Australia (RBA) Governor Philip Lowe, who pointed in a speech to further rate hikes.
“As we chart our way back to 2 to 3 per cent inflation, Australians should be prepared for more interest rate increases,” Lowe warned. “The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation.” Still, Australia’s S&P/ASX 200 index climbed 1.12 per cent in early trading. The Australian dollar rose 0.3 per cent on the news before paring gains.
The euro also gained 0.25 per cent on the improved risk sentiment, after European stock markets chalked up modest gains on Monday to recover a little from last week’s hefty losses. US markets were closed for a holiday.
The dollar index, which tracks the greenback against six major peers, eased slightly to 104.29. The Japanese yen remained under pressure at ¥135.07 per dollar, not far off a 24-year low of ¥135.58 hit early last week.
In bond markets the yield on US benchmark 10-year treasury notes was 3.2976 per cent, up a little from last Friday’s close.
Last week’s peak of 3.495 per cent was the 10-year yield’s highest since 2011, and came the same day the Fed raised interest rates by a massive 75 basis points.
Oil prices swung higher with traders focusing on tight supplies over slowing global economic growth. US crude rose 2.12 per cent to US$111.88 (RM492.05) per barrel and Brent was at US$115.56, up 1.25 per cent on the day.
The United States is in talks with Canada and other allies globally to further restrict Moscow’s energy revenue by imposing a price cap on Russian oil without causing spillover effects to low-income countries, Treasury Secretary Janet Yellen said yesterday.
Spot gold added 0.1 per cent to US$1,840.40 an ounce. US gold futures per cent to US$1,835.60 an ounce.
Bitcoin was at US$20,500 having failed to break strongly above or below the psychologically significant US$20,000 level in recent days. — Reuters
