Asian markets mixed as Fed hikes loom

HONG KONG: Asian investors started the week on a cautious note on Monday as they weighed the prospects for an expected series of interest rate hikes by the Federal Reserve, as data showed that growth in the Chinese economy had slowed at the end of last year.

As the fast-spreading variant of the Omicron coronavirus continues to cast a shadow over trading floors, the focus is on the US central bank’s plans to tighten monetary policy to combat soaring inflation.

Fed officials were out in force last week pointing out the merits of raising borrowing costs as early as March, although boss Jerome Powell said they would be careful not to derail the recovery of the world’s biggest economy. .

Yet expectations that the era of cheap money that has helped power markets reach record or multi-year highs have weighed heavily for months, while data showing soaring consumer prices at a pace not seen in four decades added to the pessimistic mood.

A weak retail sales reading for December caused by concerns over the latest wave of Covid and rising prices was compounded by a University of Michigan survey showing consumer sentiment fell sharply in January.

That saw Wall Street post a lukewarm performance on Friday, with disappointing bank earnings also weighing on sentiment.

Despite the uncertain start to 2022 for global markets, Bank of Singapore’s Eli Lee remained optimistic about the outlook.

“As we head into 2022, we believe the post-pandemic bull market remains broadly intact,” he said in a comment.

“Historically, bull markets don’t stop at the start of rate hike cycles and positive trends in global economic growth and earnings continue to be positive fundamental drivers for the market.”

Asia was mixed at the start of trade with Tokyo, Shanghai, Sydney, Singapore, Taipei and Manila up but Hong Kong, Seoul, Wellington and Jakarta down.

Stocks in mainland China were buoyed by news that the central bank had cut interest rates for the first time since the height of the pandemic last year, as authorities sought to revive stuttering growth.

Data showed on Monday that the world’s No.2 economy grew 8.1% last year – its best rate in 10 years – but has slowed in the past three months as it has been hit by lockdowns of viruses across the country and the weakness of the crucial real estate sector.

Shares of Hong Kong-listed casinos soared after Macau officials unveiled regulatory measures for the sector on Friday that weren’t as bad as initially feared.

According to the proposed bill, the number of gaming concessions will remain at six but their duration will be halved to 10 years, while the proportion of local ownership in casino businesses will increase from 10% to 15%.

The revisions are expected to “remove most major investor concerns, (e.g. on) dividends, government oversight, minimum Macau permanent resident ownership, gambling tax, etc.,” the analysts said. of Citigroup, including George Choi, in a note.

Sands Macau climbed almost 15%, Wynn Macau and MGM China gained more than 10% each, while Melco rose 8%.

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