Asian Stocks Vary over Fed Rate Hikes and China Economic Policy

Asian shares stayed vigilant on Tuesday as investors look to China’s financial policy in its attempts to stave off a potential economic decline amid looming interest rate hikes by the U.S. Federal Reserve.

According to Reuters, MSCI’s broadest index of Asia-Pacific shares outside Japan dipped by 0.5% during initial trade, as of 1:11am ET. The Chinese blue-chip CSI300 index rose by 0.06% during early trade, while Hong Kong’s Hang Seng index edged lower by 2.4%, spurred by the drop in the region’s tech sector over China’s regulatory policy clampdown. The Shanghai Composite Index inched up by 0.24% and Japan’s Nikkei climbed by 0.18%.

Markets are also awaiting earnings reports from several companies with Netflix, Johnson & Johnson, and Tesla due to release their revenue data this week. This will help ascertain the economic repercussions of the Ukraine-Russia crisis as well as mounting inflation in firms’ finances, reported Reuters.

On Friday, the People’s Bank of China (PBOC) revealed a 25 basis points (bps) cutback on the reserve requirement in the banking sector, releasing $83.25 billion in lengthy liquidity to offset a possible economic slump, despite investor skepticism.

UBS Investment Bank Research’s Chief China Economist and Head of Asia Economics, Wang Tao contended, "We expect more policy support, mainly in the form of more infrastructure investment, stronger credit growth, and easier property policy. But we do not see the government undertake 'whatever it takes' to achieve the 5.5% growth target, nor shift the COVID policy soon."

©Photo: Reuters