Asian Shares Recovered; U.S. Dollar Near Three-week Lows

Asian shares have seen recovered from the earlier losses on Wednesday despite the slow growth of the global economy, while the dollar is near three-week lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan turned bullish, up 0.32% to its highest since the month of August.

Head of Research at broker Pepperstone in Melbourne, Chris Weston said, “It’s all pretty messy across asset classes at the moment. Everyone is talking us into the idea that we are getting closer to a correction, but no one is prepared to trade that…and risk assets grind higher.”

Japan’s Nikkei gained 1.1% and noticed that its highest level since mid-July as some investors speculated political issues in the country was coming to a head.

Data shows that there were also gains in Chinese blue chips, up 1.76%, and in Hong Kong up 0.62% despite China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI)showing a contraction in activity for the first time in nearly 18 months.

Asia Senior Economist at UBP, Carlos Casanova said, “As China maintains its zero-tolerance policy for Covid, they will continue to implement these lockdowns wherever there is a small outbreak, so that suggests growth might remain under pressure.”

Manufacturing activity in August was also seen at a slower rate in Japan, South Korea, and Taiwan as chip shortages are happening due to factory shutdowns that disrupted the chip production.

Fears about slow economic growth are not new to the Asian market. Wall Street has seen marginally lower on Tuesday after US consumer confidence fell to a 6 month low in August as rising COVID-19 infections and soaring inflation affected the economic perspective.