Asian markets up on hopes of US Fed lifting

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Asian markets up on hopes of US Fed lifting

On Tuesday morning, Asian stocks increased from Tokyo to Mumbai, mirroring a solid overnight rally at Wall Street. Stocks gained because of hopes that the US Fed might do away with monetary tightening after signs of weaker economy sent US treasury yields tumbling.

As financial stability risks are growing, investors are beginning to doubt whether central banks will stay aggressive in fighting inflation, analysts said.

The first time we had a gilt market crash, now Credit Suisse is struggling with capital concerns, said Edward Moya, Senior Market Analyst at The Americas OANDA.

The BSE market capitalization increased investor wealth by 4.6 lakh crore to Rs 272.85 lakh crore from Rs 268.26 lakh crore at home, as suggested by a 1,200 points rally in Sensex earlier today.

Wall Street stocks rebounded.

The Dow Jones Industrial Average was up 765.38 points or 2.66 per cent in overnight trade to settle at 29,490. The S&P 500 index went up by 92.81 points, or 2.59 per cent, to 3,678. Nasdaq Composite was up 239.82 points, or 2.27 per cent, at 10,815. The US 10 year bond yield last stood at 3.62 against a recent high of 4.019 on September 28.

Moya said it was premature to say that the US Fed is almost done with tightening, but Wall Street is confident that they could be done in December. India was not the only gainer. South Korea's Kospi increased by 2.39 per cent to 2,207. Taiwan's key index was up 2.10 per cent. Markets across Australia and New Zealand rallied up to 3.75 per cent. The dollar index is a bit shaka when it comes to the dollar index.

The dollar shares are inversely related to equities. The Dollar index, which measures the value of the dollar against a basket of six major world currencies, has slid by 2 per cent in the last five sessions to 111.59 level on Tuesday. The index has gone up 16.31 per cent in 2022, up 16.31 per cent.

The risk-off, risk-on texture of the market is due to changing economic and market signals. The market sentiment has turned positive for now, with the decline in dollar and US bond yields. If this trend continues, FPIs will turn big buyers in India, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

After a 5% jump in oil price gains, oil price gains were muted.

After rallying over 5 per cent in the previous session, oil prices did not see a surge in Tuesday's trade. The US crude futures rose 22 cents, or 0.3 per cent, to $83.85 a barrel in Tuesday's trade, as per Reuters, after rallying more than 5 per cent in the previous session.

Ravindra Rao, VP of Commodity Research at Kotak Securities said even as crude prices have gone up on OPEC production cut expectations, one needs to keep a watch on production targets by OPEC, which is lagging behind.

A fall in the Dollar index has supported the oil bulls, and any reversal of the index could cap the gains in oil, he said.