Trading volume muted as investors await word on rate hikes
AFP/Getty ImagesA man walks between ferry piers along Victoria Harbour in Hong Kong on Monday. DMAMBMCMDMEMGPREVIEWZBZBRZDZDRZFZGZQZRZSZTZU
Global stock markets rose Wednesday, with broad gains in Asia after equities in Europe and the U.S. partially reversed their start-of-week declines.
Volume in Asia was muted because of a holiday in Japan and ahead of an expected Federal Reserve interest-rate increase and updated economic projections.
Hong Kong’s Hang Seng Index (^HSI) lost half its earlier increase in afternoon trading but was still up 0.6%. Shares of Chinese developers shed some of their earlier gains after upbeat sales data while internet heavyweight Tencent (0700.HK) lost its early 2% advance ahead of its 2017 report later Wednesday.
“Earnings so far are pretty much in line with positive expectations of the market,” helping stocks move higher despite the prospect of continued U.S. rate increases, said Ben Bei, head of equity research at CIMB in Hong Kong. Unless there is a strong hawkish bias from the Fed on Wednesday, he said stock markets are likely to stay focused on corporate results.
Earnings growth at large Chinese firms has been better than expected, said Bocom International’s Hao Hong.
New Zealand’s NZX 50 (^NZ50) closed up 1.4%, notching its fifth record finish of the past week and a half. Synlait Milk (SML.NZ) soared 14% to a fresh all-time high after posting record fiscal first-half earnings and giving upbeat guidance. Partner a2 Milk (ATM.NZ) rose 3.6%.
Oil stocks were also outperforming, after crude’s 2% price jump Tuesday on concerns about tensions between Saudi Arabia and Iran. Though the energy sector rose 1.2% in Australia, the country’s stock benchmark (^AXJO) closed just 0.2% higher due to weakness in health-care and real-estate stocks.
Indexes in India (^BSESN) and Indonesia rebounded nearly 1% Wednesday while S&P 500 futures (GLBX:ESM8) were up 0.1%.
Key in the Fed releases Wednesday will be the number of interest-rate increases policy makers predict for 2018. In December, expectations were for three increases, which would match the number in 2017. But some analysts have raised the prospect of four rate rises this year as U.S. economic growth has picked up and inflation could do the same.
While stocks are off early February lows, “I think we are still going through a corrective phase where the market is pricing for a higher-rate environment,” said Paul Kitney, chief equity strategist for Asia Pacific at Daiwa Capital Markets.
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