Asia stocks rise on hopes regional central banks hold steady on rates
Asia stocks posted gains on Tuesday, boosted by investor optimism that the region’s central banks will continue to pause or end interest rate hike cycles, whatever action the U.S. Federal Reserve takes.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.6% as trading resumed after a long holiday weekend in many major Asian markets.
On Tuesday morning, South Korea’s central bank held interest rates steady for a second consecutive meeting, as expected.
Gary Ng, senior economist at Natixis Corporate and Investment Bank, said Asian economies are more cautious about hiking rates as their determination to preserve growth outweighs concern over taming inflation, which is a bigger concern in the U.S. and Europe.
Strong U.S. employment data published last Friday sparked expectations that the Fed may hike rates in May, but the 25 basis point rise now priced in by the market is smaller than what had previously been estimated, according to Ng.
“I think investors are more optimistic in terms of seeing the end of the rate cycle,” he added, “but whether we are already at the top – that is really the key driver of this oscillation that we see right now.”
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