EMERGING MARKETS – Asian stocks bullish, but investors wary of impending rate hikes

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Band Tejaswi Marthi

June 8 (Reuters)Asian stocks rose on Wednesday, following a rally on Wall Street, but gains were capped by investor fears that aggressive central bank rate hikes could lead to stagflation.

Actions in Taiwan .TWII led Asian markets’ gains to rise 1%, followed by a 0.5% rise in Thai stocks .SETI. malaysia .KLSE also traded 0.2% higher.

Thailand’s central bank will meet later today and analysts widely expect it to hold the overnight repo rate at 0.50% to support the economic recovery.

Thailand’s headline inflation in May hit its highest level in nearly 14 years and prices are expected to continue rising, beating the central bank’s 1% to 3% target

While the Bank of Thailand (BOT) will find it hard to ignore this reading, it can still turn to fiscal policy efforts to contain inflation as it faces considerable pressure to foster a full economic recovery.

Currencies in the region were broadly subdued, following a decline in the US dollar after Target Corp warned of excess inventory and said it would cut prices, offering some relief to those thinking that inflation could peak. USD/

The Rupee RDI= and the baht THB=TH fell 0.2% each, and the Philippine peso PHP= down 0.1%. The Malaysian ringgit MYR= and Indian rupee RNI=IN against the trend.

“The market is still digesting that the US Federal Reserve is sticking to its aggressive course in an effort to get inflation under control. The US economy has not yet slowed enough to get inflation under control. “said Moh Siong Sim, FX strategist at Bank. from Singapore.

India’s central bank, the Reserve Bank of India (RBI), raised the key repo rate by 50 basis points (bps), the second hike in as many months, to tackle runaway inflation, adding that the faster pace of monetary policy normalization in advanced economies has amplified financial market volatility.

Wednesday’s increase follows a 40 basis point hike in early May at an unscheduled meeting that kicked off the central bank’s tightening cycle, which economists expect to be relatively short.

Growing supply constraints and growing demand prospects from China have pushed oil prices even higher, weighing on regional currencies. WHERE

Meanwhile, the World Bank cut its global growth forecast by almost a third to 2.9% for 2022, warning that Russia’s invasion of Ukraine has compounded the damage of the COVID-19 pandemic. 19, and many countries are now facing recession.

STRONG POINTS:

**South Korea’s economy grew 0.6% seasonally adjusted in the first quarter from three months earlier, slightly lower than the 0.7% growth estimated earlier

**Indonesia to reduce the maximum palm oil export duty and tax to a combined trade min of $488/T

** Indonesian 10-year benchmark yields rise to 7.075%

Asian Stock Indices and Currencies at 0421 GMT

COUNTRY

FXRIC

DAILY FX %

FX YTD%

INDEX

DAILY STOCKS %

INVENTORY YTD %

Japan

JPY=

-0.40

-13.55

.N225

0.88

-2.08

China

CNY=CFXS

-0.03

-4.77

.SSEC

-0.70

-11.56

India

RNI=IN

+0.04

-4.31

.NSEI

-0.23

-5.62

Indonesia

RDI=

-0.15

-1.55

.JKSE

0.61

9.17

Malaysia

MYR=

+0.06

-5.17

.KLSE

0.21

-2.45

Philippines

PHP=

-0.11

-3.59

.PSI

0.31

-4.89

South Korea

KRW=KFTC

+0.09

-5.40

.KS11

-0.06

-11.85

Singapore

CAD=

-0.04

-1.84

.STI

-0.18

3.45

Taiwan

TWD=TP

-0.00

-6.18

.TWII

0.97

-8.55

Thailand

THB=TH

-0.23

-3.22

.SETI

0.18

-1.37

(Reporting by Tejaswi Marthi in Bengaluru; Editing by Kim Coghill)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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