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Hong Kong stocks rise as Alibaba slips; Australia hikes interest rate

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SINGAPORE — Stocks across Asia-Pacific mostly fell on Tuesday, with Hong Kong dropping as markets in the city returned to trade from a holiday. Investors will closely watch Australia’s interest rate decision set to be released in the day ahead.

Hong Kong’s Hang Seng index declined 0.56% as shares of Alibaba fell more than 5%, before last paring losses to lose 2.45%.

U.K.-based bank HSBC edged down 0.1%. On Friday, Reuters reported HSBC’s top shareholder Chinese insurance giant Ping An called for the bank’s break-up.

Ronald Wan, non-executive chairman at Partners Financial Holdings, told CNBC’s “Street Signs Asia” on Tuesday: “When we look at this matter, we need to add in some sort of a political element as well.”

“Definitely the Hong Kong operation can be operating independently … separated from other parts of operation. I think it can follow the instruction of the government …more correctly,” Wan said. “For the global investors, I think they need to make a decision whether they should accept this … separation or spinoff.”

Australia’s S&P/ASX 200 traded below the flatline as banks and major miners fell. The Commonwealth Bank of Australia declined 0.68% and miner Fortescue dropped 2.73%.

After the much-stronger-than-expected Q1 inflation report, we expect the first in a series of hikes from the [Reserve Bank of Australia] today.
Brian Martin and Daniel Hynes
ANZ Research analysts

Economic data in the day ahead includes Australia’s interest rate decision, which will be significant as analysts widely expect the first rate hike in more than a decade.

Australia’s central bank is expected to raise its official cash rate by 15 basis points to 0.25%, according to the median forecast of a Reuters poll of 32 economists.

Ahead of the decision, the Australian dollar rose to $0.7084, from levels around $0.704 earlier.

“After the much-stronger-than-expected Q1 inflation report, we expect the first in a series of hikes from the [Reserve Bank of Australia] today. The breadth and momentum of inflation in the Q1 [consumer price index] report strongly suggests that the RBA won’t wait for data on wages,” ANZ Research analysts Brian Martin and Daniel Hynes wrote in a note.

“This will be the first time the RBA has increased rates since November 2010,” they added.

Over in South Korea, the Kospi rose 0.3%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.31%.

Several markets are closed in the region for holidays, including China, Japan, Singapore and India. Hong Kong will return to trade from a holiday on Monday.

Over in Europe, shares in the region abruptly fell on Monday, driven by a brief crash in Swedish markets. It was caused by a single sell order trade from Citigroup, reportedly tied to a wrong calculation relating to a Nasdaq index that involved Swedish stocks.

In U.S. stocks, the S&P 500 and Nasdaq Composite hit new lows for the year before closing in positive territory for the day.

The Nasdaq Composite rose 1.63% to 12,536.02, while the S&P 500 rose 0.57% to 4,155.38. The Dow Jones Industrial Average gained 84.29 points, or 0.26%, to close at 33,061.50. The Dow was down more than 500 points at its session lows.

Financial markets expect the U.S. central bank on Wednesday to announce a half-percentage point increase in the Fed’s benchmark interest rate.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.507, falling from levels around 103.7 earlier.

The Japanese yen traded at 130.03 per dollar, as it stayed at levels weaker than 129.

Oil prices were higher in the morning of Asia trading hours, with international benchmark Brent crude futures up 0.16% to $107.75 per barrel. U.S. crude futures rose 0.13% to $105.3 per barrel.

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