August 14, 2022

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Asian stocks bounced on China’s real estate fund as Fed hike looms

Asian stocks bounced on China's real estate fund as Fed hike looms

A man wearing a protective mask, amid the outbreak of the coronavirus disease (COVID-19), walks through an electronic board displaying stock indices of various countries including the empty Russian Trading System (RTS) index, outside a brokerage in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon

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  • Chinese stocks rise due to reported real estate aid
  • Investors expect the Fed to raise 75 basis points
  • Markets are now focused on corporate profits

HONG KONG (July 26) (Reuters) – Asian stocks pared losses on Tuesday as investor sentiment improved over China’s reported plans to tackle a debt crisis in property developers.

MSCI’s broadest measure of Asian stocks outside Japan (MIAPJ0000PUS.) It rebounded to a 0.36% gain in the afternoon sessions. Chinese stocks jumped after reports that the country will create a fund of up to $44 billion to help real estate developers. Read more

Hong Kong’s Hang Seng Index (.HSI) It was 1.48% higher and the China benchmark CSI300 (.CSI300) It also extended gains to reach 0.91% at the morning close. Japan’s Nikkei Index (.N225) It fell 0.08%, erasing some of the morning’s losses.

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FTSE futures are up 0.15%. US markets are likely to open lower, with S&P 500 futures down 0.32%.

US retailer Walmart Inc (WMT.N) It lowered its earnings forecast on Monday and said clients have reduced their discretionary purchases with inflation in household budgets. Shares were down 10% after hours. Read more

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Investors are also waiting for a possible 75 basis point Fed rate increase later this week – with markets pricing around 10% the risk of a bigger rally, as well as waiting to see if economic warning signs lead to a shift in rhetoric.

“We’re inclined to the view that 75 basis points is more likely, but it won’t be the end unless they see some demand destruction and some easing in inflation,” said John Milroy, investment advisor at Ord Minute.

“We fear that they will have to materially add to the slowdown in the US economy.”

Big tech companies like Apple (AAPL.O)Microsoft (MSFT.O) Amazon.com is due to report earnings this week.

“The market has stabilized” on expectations of a rate hike, said Redmond Wong, market strategist for Greater China at Saxo Markets in Hong Kong. ‘Now focus on profits.’

“Maintaining stability is the main theme,” Wong said of the possible outcomes of Politburo meetings expected to begin this week in China.

In currencies, the dollar was marginally softer but didn’t drift much from recent highs as uncertainty continued to swirl around the interest rate and economic outlook.

The euro rose 0.21% to $1.0240, but it was surrounded by uncertainty about energy security in Europe, which was not helped by an imminent cut in the flow of Russian gas westward. Read more

The yen settled at 136.54 per dollar. The US dollar index, which touched a 20-year high this month, fell slightly to 106.380.

Oil prices rose further on expectations that Russia’s cut in natural gas supplies to Europe could encourage a switch to crude, with Brent crude futures up 1.27% at $106.45 a barrel, and US crude rising 1.26% to $97.92 a barrel. Read more

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The benchmark 10-year Treasury yield fell to 2.875% as growth concerns gave a boost to bonds.

Gold was hovering at $1721.8 an ounce and Bitcoin took losses last night at $2,1111.31.

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Covering by Ken Woo in Hong Kong; Editing by Sam Holmes

Our criteria: Thomson Reuters Trust Principles.