Most Asian markets rise on recovery hope

Most Asian equities pushed higher yesterday as investors were buoyed by China’s reopening and optimism that key data due this week will signal a further slowdown in United States inflation.

Traders tracked a Wall Street advance as they brushed off fresh warnings that US Federal Reserve (Fed) rates would continue to rise and a World Bank decision to slash its global growth forecast.

After a stumble on Tuesday, regional markets resumed the upward push that has characterised the start of the year thanks to China’s emergence from nearly three years of zero-Covid isolation.

SPI Asset Management’s Stephen Innes said: “Despite a solid start to the year, there should be a lot more upside to China’s stocks, with earnings upgrades to drive further outperformance.

“Although we are not pitching a tent in that camp just yet, many investors are starting to believe China’s reopening could be faster than expected on pent-up demand, a robust economic rebound and fewer supply constraints.”

Hong Kong rose again, having already added about eight per cent so far this year.

Tokyo, Sydney, Seoul, Mumbai and Singapore were also in the ascendancy, though there were losses in Shanghai, Wellington, Taipei and Manila.

London, Paris and Frankfurt opened higher.

The focus is US Consumer Price Index (CPI) data, which is expected to show that price gains eased further last month.

But while that could possibly allow the Fed to take a lighter approach to its monetary tightening campaign, policymakers continue to push back against any pivot away from rate hikes.

Markets were battered last year by fears that almost a year of hikes will tip the economy into recession.

Fed boss Jerome Powell said that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy”.

And JP Morgan Chase CEO Jamie Dimon said borrowing costs could actually go higher than the five per cent priced in by markets, suggesting they could hit six per cent.

“The US CPI report is now the next focus for markets in the tug of war currently playing out between the market, which thinks the Fed will have to cut rates this year, and Fed officials who insist nothing even close to that will happen,” said Michael Hewson at CMC Markets.