Global stocks and Wall Street futures yesterday rebounded as investors digested last week’s US Federal Reserve pledge to fight inflation by keeping interest rates elevated.
Shares in Taipei, Tokyo, London and Frankfurt advanced, while Shanghai declined.
Wall Street futures were higher after the benchmark S&P 500 fell 0.7 percent on Monday, adding to last week’s losses. The Dow Jones Industrial Average dropped 0.6 percent and the NASDAQ composite tumbled 1 percent on Monday.
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The TAIEX yesterday staged a mild technical rebound after a slump in the previous session as investors ignored the losses suffered by the US markets overnight, dealers said.
However, turnover remained low as investors appeared reluctant to chase prices amid concerns that the Fed would continue an aggressive approach to rate hikes to rein in inflation, dealers added.
The TAIEX closed up 27.44 points, or 0.18 percent, at 14,953.63. Turnover totaled NT$183.068 billion (US$6.01 billion), with foreign institutional investors selling a net NT$18.47 billion of shares, Taiwan Stock Exchange data showed.
“Compared to the US markets, the Taiwan market showed resilience in bouncing back after Monday’s plunge,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said. “Still, it was not easy to jump over the high technical hurdles ahead of 15,000 points for the moment.”
“Investors had better pay close attention to the August US job data due Friday for more clues about the Fed’s policy,” he said.
Elsewhere in Asia, the Shanghai Composite Index lost 0.4 percent to 3,227.22 and the Hang Seng Index in Hong Kong shed 0.4 percent to 19,949.03.
The Nikkei 225 index in Tokyo gained 1.2 percent to 28,217.36 after the official unemployment rate for last month held steady and the labor participation rate stayed at a record high.
The KOSPI in Seoul added 1 percent to 2,450.93 and Sydney’s S&P/ASX 200 gained 0.5 percent to 6,998.30.
India’s S&P BSE SENSEX advanced 2 percent to 59,139.81. New Zealand and Southeast Asian markets also advanced.
In early trading in Europe, the FTSE 100 in London opened up 0.6 percent at 7,472.03 and Frankfurt’s DAX added 1.4 percent to 13.079.12. The CAC 40 in Paris gained 1.1 percent to 6,288.59.
On Wall Street, the S&P 500 future was up 1 percent. That for the Dow Jones Industrial Average gained 0.8 percent.
However, the rebound might not last. Credit Suisse Group AG recommended investors go underweight in global equities following the Jackson Hole symposium, where US central bankers doubled down on their bid to tame inflation through higher interest rates.
Powell’s pushback against market hopes for a pivot to interest-rate cuts next year is the latest setback in a challenging year for investors. The Fed this week is also set to step up the unwinding of its near US$9 trillion balance sheet.
Other risks range from China’s economic slowdown to Europe’s energy crisis as Russia continues its war in Ukraine and chokes gas supplies.
“The markets are spooked because they are afraid that the Fed could create a hard landing — that they’ll raise rates into a recession and that will be really painful for the economy and for corporate profits,” Zuma Wealth LLC chief investment officer Terri Spath said on Bloomberg Television.
Meanwhile, China’s central bank set a stronger-than-expected yuan fixing for a fifth day, a sign it does not want an excessively weak currency. The move highlights how greenback strength is a challenge for Asia as the region’s currencies slip.
Additional reporting by CNA and Bloomberg
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