Asian Shares Rally as Investors Bet on Slower Fed Rate Hikes

Stocks in Asia rose on Tuesday, mirroring gains on Wall Street, as investors banked on a more gradual pace of rate hikes from the US Federal Reserve and tech firms continued to perform well.

Australian stocks followed Wall Street’s tech-fueled gain ahead of key earnings releases, sending the S&P/ASX 200 up 0.28% at 9.24 a.m. (Thai time). Nikkei 225 in Japan added 1.58%.

For a second consecutive day, the Japanese yen has traded over 130 against the US dollar, with a closing price of 130.53.

There will be a release of the Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index later on today.

The markets in mainland China, Hong Kong, Taiwan, South Korea, Malaysia, and Singapore are all closed today due to holidays.

On hopes that the Federal Reserve could slow down its interest rate hikes, the Nasdaq Composite in the United States increased by more than 2%. Wholesale prices and retail sales both fell last week, according to economic data.

Morgan Stanley’s strategist Michael Wilson saw that investors have already priced in their expectations for a less aggressive Federal Reserve, China’s reopening, and a weaker dollar. Despite the fact that 2023 was challenging, he anticipates a stock market rally in 2024 as the US economy emerges from its profits slowdown.

It is expected that the Fed will only raise rates by 25 basis points during its meeting on January 31 and February 1. Despite multiple government officials saying interest rates must rise over 5% and remain up for a prolonged period of time, markets remain wary.