Asia stocks rise on hopes regional central banks hold steady on rates

By Selena Li

HONG KONG (Reuters) – Asia stock prices rose on Tuesday, boosted by investor optimism that the region’s central banks will continue to pause or end interest rate increase cycles, whatever action the U.S. Federal Reserve takes.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.44% as trading resumed after a long holiday weekend in many major Asian markets.

On Tuesday morning, South Korea’s central bank held interest rates steady for a second consecutive meeting, as expected.

Meanwhile, China’s disappointing consumer price index reading on Tuesday – a 0.7% year-on-year increase, or an 18-month low – is shoring up the case for policymakers to take more steps to boost an economic recovery from the pandemic hit.Gary Ng, senior economist at Natixis Corporate and Investment Bank, said Asian economies are more cautious about raising rates as their determination to preserve growth outweighs concern over taming inflation, which is a bigger concern in the U.S. and Europe.

Strong U.S. employment data published Friday sparked expectations that the Fed may increase rates in May, but the 25 basis point rise now priced in by the market is smaller than what had been estimated, according to Ng.

“I think investors are more optimistic in terms of seeing the end of the rate cycle,” he added, “but whether we are already at the top – that is really the key driver of this oscillation that we see right now.”

Japan’s advanced 1.34% to further its gains as the market welcomed the new Bank of Japan governor’s first public remarks on maintaining the central bank’s ultra-easy monetary policy.

The Japanese yen weakened 0.19% versus the dollar to 133.34.

Australia’s gained 1.25% with miner Newcrest’s shares jumping as much as 7.1% on an improved takeover offer from Newmont, making it the top gainer on the benchmark.

Hong Kong stocks traded mixed as sentiment took a hit after data indicating China’s demand weakness persists, but property developers rose.

The stock price of Chinese property developer Longfor Group 0960.HK jump as much as 8.9% to HK$23.30, its highest since March 8.

Shares of Chinese artificial intelligence company SenseTime reversed earlier gains of as much as 11%, falling more than 6% on Tuesday.

Elsewhere, the yield on benchmark U.S. Treasury 10-year notes fell by one basis point to 3.4055%.

The edged down by 0.146% to 102.32. Gold price rose 0.32% to $1996.25 on Tuesday as the dollar weakened.

Major cryptocurrency bitcoin reached the $30,000 level for the first time in 10 months on Tuesday, adding to its steady gains as investors raised bets the Fed may soon end its tightening.

peaked at $30,438 in Asian trade and was last 2% higher at $30,262. It has gained about 6% since the start of the month, after rising 23% in March.

In oil markets, gained 0.6% to $80.19 per barrel while was at $84.65, also up 0.6%.