Wednesday 22nd March 2023: Higher interest rates loom as Asian stocks rally

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Global Markets:

  • Asian Stock Markets : Nikkei up 1.93%, Shanghai Composite up 0.31%, Hang Seng up 1.70%, ASX up 0.87%
  • Commodities : Gold at $1947.60 (+0.33%), Silver at $22.55 (+0.54%), Brent Oil at $74.89 (-0.57%), WTI Oil at $69.19 (-0.69%)
  • Rates : US 10-year yield at 3.579, UK 10-year yield at 3.484, Germany 10-year yield at 2.312

News & Data:

  • (GBP) CPI y/y 10.40% vs 9.90% expected
  • (USD) Existing Home Sales 4.58M vs 4.19M expected
  • (CAD) Common CPI y/y 6.40% vs 6.50% expected
  • (CAD) Trimmed CPI y/y 4.80% vs 4.90% expected
  • (CAD) Median CPI y/y 4.90% vs 4.80% expected
  • (CAD) CPI m/m 0.40% vs 0.50% expected
  • (EUR) German ZEW Economic Sentiment 13 vs 14.9 expected

Markets Update:

Asian stocks rose on Wednesday as investors awaited the US Federal Reserve’s decision on interest rates, which is expected to be a 25 basis point hike. The move would be the first rate increase since June 2022 and would signal the Fed’s confidence in the US economic recovery amid the ongoing banking crisis.

China’s Shanghai Composite index gained 0.5%, Hong Kong’s Hang Seng surged 2.3%, South Korea’s KOSPI advanced 1.1% and Japan’s Nikkei 225 jumped 1.9%. India’s Nifty 50 also climbed 0.70% to close at 17,107.50, supported by positive cues from global markets and easing domestic inflation.

Among commodities, crude oil prices edged higher as OPEC+ agreed to maintain its current output levels until April 2023, despite concerns over demand due to the Omicron variant of Covid-19. Gold prices, however, fell as the prospect of higher interest rates reduced the appeal of the safe-haven metal. The US dollar index, which measures the greenback against a basket of six major currencies, was little changed at 96.40 as traders awaited further guidance from the Fed on its monetary policy outlook and tapering plans.

Upcoming Events: 

  • 07:00 AM GMT – (GBP) CPI y/y
  • 08:45 AM GMT – (EUR) ECB President Lagarde Speaks
  • 06:00 PM GMT – (USD) FOMC Economic Projections
  • 06:00 PM GMT – (USD) FOMC Statement
  • 06:00 PM GMT – (USD) Federal Funds Rate
  • 06:30 PM GMT – (USD) FOMC Press Conference