Hong Kong-Equity markets mostly rose Wednesday as investors weighed data showing the US economy remained resilient in the face of rising interest rates against the prospect of more tightening to bring inflation under control.
Wall Street popped higher Tuesday after a string of readings soothed concerns about a possible recession, while traders were also cheered by Chinese growth pledges. However, reports that Washington could block the export of artificial intelligence chips to China weighed on sentiment. US investors cheered news that a closely watched gauge of consumer confidence last month hit its highest level since January last year, while new home sales surged in May and orders for big-ticket manufactured items rose again. The figures tempered fears that the world’s top economy could tip into recession because of more than a year of rate hikes and lifted hopes the US Federal Reserve could still guide it to a so-called soft landing by also bringing inflation down to its two percent target. President Joe Biden on Tuesday said that while economists had predicted a contraction was on the way, it still had not materialized.
“It’s been coming for 11 months, well guess what? I don’t think it is going to come,” he told a fundraiser, flagging healthy jobs growth and anti-inflation measures. But National Australia Bank’s Rodrigo Catril pointed to “the theme of ‘sectoral recessions’ playing with different lags, making the Fed job to tame inflation harder”. He pointed to the property sector now performing well after being the first to be hit by rate hikes, while manufacturing is in recession at the same time the services sector is growing. “Meanwhile the resilience of the labor market and consumer are feeding, not detracting from, inflationary pressures,” he added. “Overall, the data is telling us the Fed needs to keep its foot on the tightening pedal.” Asian investors struggled to maintain Tuesday’s momentum in the morning but picked up the pace in the afternoon. Tokyo, Hong Kong, Sydney, Singapore, Wellington, Mumbai, Wellington, Bangkok and Taipei all rose. Shanghai ended flat but Seoul dropped. London, Paris and Frankfurt opened on the front foot.