- Shanghai rallies as Chinese administration discusses more stimulus to propel economic recovery.
- Japanese stocks are showing caution as investors are mixed about the upcoming interest rate policy.
- Oil prices are approaching $80.00 as investors have priced in further interest rate hikes from global central banks.
Markets in the Asian domain have posted mixed sentiment on Tuesday as investors are preparing for the interest rate decision by the Federal Reserve (Fed), which will be announced on Wednesday. As an interest rate hike of 25 basis points (bps) by the Fed, which will push interest rates to 5.25-5.50% looks certain, the catalyst that could bring volatility in global markets is the interest rate guidance.
S&P500 futures seem choppy in Asia amid corporate earnings season and the upcoming Fed’s monetary policy. The overall market mood is still bullish as investors have priced in uncertain earnings and the United States central bank's hawkish policy.
At the press time, Nikkei 225 drops 0.27%, Shanghai soars 1.89%, Hang Sang rallies 3.42%, and Nifty50 eases nominally.
Japanese stocks are showing caution as investors are mixed about the upcoming interest rate policy by the Bank of Japan (BoJ), which will be announced on Friday. While BoJ Governor Kazuo Ueda has been consistently reiterating the need for more stimulus to maintain inflation steadily above 2%, Japan's top financial diplomat Masato Kanda forecasted a tweak in monetary policy.
Japan’s Kanda suggested the central bank may tweak its approach to monetary stimulus at its next policy meeting, due to "signs of changes" in corporate behavior on wage growth and price rises, Reuters informed.
Meanwhile, Chinese equities seem running on steroids amid headlines of more stimulus to trigger economic recovery. State news agency Xinhua cited the Politburo - the top decision-making body of the ruling Communist Party - saying that China will step up economic policy adjustments, focusing on expanding domestic demand, boosting confidence, and preventing risks.
On the oil front, oil prices are trading sideways around $79.00 but approaching the crucial resistance of $80.00 as investors have digested a fresh interest rate hike cycle from global central banks. Also, more stimulus support in China would elevate factory activities and henceforth the oil demand, It is worth noting that China is the largest importer of oil in the world, and economic recovery in China supports the oil price.
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