Asian equities gained on Wednesday while bonds extended steep losses after Federal Reserve’s signaled a hawkish approach to tame down inflation.
The CSI300, HSI, KOSI and TOPIX gained by 0.28%, 1.69%, 0.76% and 2.03% respectively The MSCI Asian Index ex Japan gained by 1.25%.
U.S. contracts fluctuated after the S&P 500 advanced for the fifth session in six.
U.S. treasuries extended losses after signals from Federal Reserve Chair Jerome Powell that a half-point interest-rate hike is possible at the central bank’s next meeting.
In almost four decades short-term U.S. government bonds posted its worst quarterly performance and yields hovering at a level that was last seen in mid-2019. The U.S. dollar gained while yen slipped to a six-year low.
“We are positive for equities for this year,” Seema Shah, Principal Global Investors chief strategist, said on Bloomberg Television as reported by Bloomberg.
While the market may be more challenged in 2023 and recession risks are rising, “we still think the U.S. economy is pretty good fundamentally,” she said.
“Faster hikes are clearly going to help inflation come down,” which may reduce the need for a longer tightening campaign, she added.
On the Ukraine front, President Joe Biden and allies meeting Thursday in Brussels are expected to announce new sanctions against Russia over its invasion of Ukraine and fresh measures designed to keep the Kremlin from sidestepping existing economic penalties.
Crude oil gained with WTI trading around $110 a barrel while Brent is trading around $116 a barrel.
