Asian stocks rise as bank rout eases, markets bet on less hawkish Fed

By Ambar Warrick

Investing.com — Most Asian stock markets rose on Wednesday, helped by a recovery in bank shares amid easing fears over a potential crisis in the U.S., while growing bets that the Federal Reserve will adopt a less hawkish stance also aided sentiment.

Regional markets took positive cues from an , after data read largely as expected for February. The data, coupled with recent pressure on the banking sector, spurred bets that the Fed will have limited room to hike interest rates.

Technology-heavy bourses gained the most, with Hong Kong’s and South Korea’s up more than 1% each on Wednesday. The two were also among the worst hit by a stock rout earlier this week.

China’s and indexes added 0.4% and 0.7%, respectively, as mixed economic data showed that a recovery in the country was gaining steam, albeit at a staggered pace.

Chinese rose slightly less than expected in February, while and bounced back from pandemic-era lows. The readings drove some optimism over a recovery in Asia’s largest economy, after it withdrew most anti-COVID measures earlier this year.

India’s and indexes added about 0.6% each, as a softer-than-expected reading for February drove up optimism over easing price pressures in the country.

Broader Asian markets rose amid easing fears of a U.S. banking crisis, after the government intervened in the sector to protect depositors after the collapse of Silicon Valley Bank and two other regional players.

Japan’s rose 0.2%, as major bank stocks recovered, while Australia’s index added 0.7% on a recovery in the country’s big four banks. Australian mining stocks were also supported by the prospect of a Chinese economic recovery.

Thailand’s led gains across Southeast Asia with a 2.2% bounce.

Markets are betting that growing pressure on lenders, coupled with signs that overall inflation eased in February, will elicit a less hawkish Fed in the coming months. But traders are still by the Fed next week, as stubborn showed that price pressures still remained relatively elevated in the country.

Rising interest rates are expected to limit any major gains in Asian stocks this year, given that they limit capital flows to the region.