Dip-buying supports Asia, China outperforms on firmer economic data

  • Asian equities are attracting dip-buyers on a rebound in the positive market sentiment.
  • Chinese stocks are extremely positive on upbeat economic data.
  • The Fed is highly expected to announce a 75 bps rate hike in its monetary policy meeting.

Markets in the Asian domain are attracting some bids at dips as the US Treasury yields have displayed a loss of momentum after recording peaks. The 10-year US Treasury yields are trading at 3.43%, mildly lower from its 11-year high of 3.5%. This has improved the risk appetite of the market participants ahead of the Federal Reserve (Fed) monetary policy meeting and Asian equities have found some dip-buying but still eyes more filters for a fresh buying scenario.

At the press time, Japan’s Nikkei225 tumbled almost 1%, and Nifty50 eased 0.25% while Hang Seng jumped 1.36%, and China A50 added 1.86%.

Chinese equities have got an adrenaline rush on upbeat economic data. China’s National Bureau of Statistics has reported the annual Retail Sales at -6.7%, much better than the expectation of -7.1% and the prior print of -11.1%. While the Industrial Production has turned positive as it has landed at 0.7%, significantly higher than the consensus of -0.7% and the former figure of -2.9%. Despite, the two-month extreme lockdown restrictions by the Chinese authorities to contain the spread of the Covid-19, the Chinese economy has displayed an outperformance.

Going forward, the mega event of the interest rate decision by the Federal Reserve (Fed) will guide the risk-sensitive assets. Last week’s stronger US Inflation data has bolstered the odds of a 75 basis point (bps) rate hike by the Fed. The odds of a rate hike by 75 bps have increased sharply, which has sidelined investors. Fed chair Jerome Powell dictated in his testimony that a 75 bps rate hike is not into consideration. So it will be exciting to see in which way the highest official of the Fed will deal with the inflation mess.

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