Asia Equities Open Lower as Markets Focus on Interest Rates
Author: William Langley in Hong Kong
Shares across Asia declined on Tuesday as investors turned their attention to the possibility of elevated global interest rates. Hong Kong’s Hang Seng index fell by 2.8%, while Japan’s Topix dropped by 1.1%. Markets in mainland China and South Korea were closed in observance of public holidays.
The Reserve Bank of Australia (RBA) is set to make an interest rate decision on Tuesday. Economists predict that the central bank will keep the cash rate at 4.1%, an 11-year high. In other news, troubled property developer China Evergrande’s shares are set to resume trading on the Hong Kong stock exchange. Trading was suspended last Thursday after the company’s billionaire chairman, Hui Ka Yan, faced “mandatory measures” for suspicion of “illegal crimes.”
Furthermore, South Korean financial markets were closed for National Foundation Day, while the UN Security Council approved a security mission to combat gangs in Haiti. Kenya has pledged to lead the mission with 1,000 police officers, and some Caribbean nations have also promised their support. The United States stated that it would back the mission but would not send troops.
Meanwhile, the nominee for the EU climate chief, Wopke Hoekstra, proposed a global tax on fossil fuels to fund a “loss and damage” fund for developing countries affected by carbon pollution. Hoekstra suggested including taxes on fuels used by the airline and shipping industries. Finally, oil prices hit a three-week low due to concerns over high interest rates potentially decreasing fuel demand. Brent crude fell by 1.6% to settle at $90.71 per barrel, while US crude settled 2.2% lower at $88.82.
In the US, stocks closed higher despite a tumultuous trading session dominated by a bond market sell-off. The S&P 500 experienced a late recovery to close slightly higher, with gains from the “Magnificent Seven” Big Tech stocks contributing to the positive performance. The tech-heavy Nasdaq Composite also advanced by 0.7%.
Overall, global markets continue to be influenced by interest rate dynamics, geopolitical situations, and developments in various sectors. Investors are closely monitoring these factors to navigate the current market environment.