Gloomy Days in Asian Markets

A vacation in Japan resulted in lower trading volumes on Monday, and most Asian stock markets dipped as investors shunned risky assets ahead of a U.S. Federal Reserve meeting later this week.

With a two-day Fed meeting beginning on Tuesday and a 75-basis point (bps) increase in interest rates largely anticipated, the majority of major Asian bourses continued their declines from the previous week. Stock markets suffered last week due to worries about the rise, which were exacerbated by hotter-than-expected U.S. inflation statistics that solidified expectations for a hawkish move.

Beijing Boost Economy

In an effort to boost economic development, the People’s Bank of China reduced repo rates and raised the rate at which it is injecting cash into the system on Monday. Expectations that Beijing would continue to boost expenditure and relax regulations to boost economic development have helped slightly support Chinese equities in recent months. Recently, the Communist Party hinted that it might increase its stimulus programs for the current quarter. According to economic indicators, China’s economy is suffering from sluggish development and bleak prospects due to its rigorous zero-COVID policy.

On Monday, the People’s Bank of China reduced repo rates and accelerated the rate at which it injected cash into the economy to spur economic expansion. Expectations that Beijing would continue to raise expenditure and loosen policy in order to stimulate economic development have somewhat supported Chinese equities in recent months. The Communist Party recently gave the impression that it will increase its stimulus programs in the current quarter. As a result of its rigorous zero-COVID policy, China’s economy is suffering from slower development and fading prospects.

For other hints on how central bankers aim to address increasing inflation, Asian markets are also paying attention to central bank meetings this week in Japan, the Philippines, and Indonesia. While rate increases in the Philippines and Indonesia are anticipated, the Bank of Japan has not yet indicated that it plans to do so, partly because the Japanese economy is still suffering due to the COVID-19 outbreak.

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