Why did Asia-Pacific stocks edge higher? Explained

As global concerns persist, Asia-Pacific stocks mixed. Xpeng shares are down ahead of earnings. Let’s see why Asia-Pacific stocks edge higher.

Asia-Pacific stocks edge higher

On Monday, Asian markets got off to a shaky start as ongoing inflation fears and the likelihood of higher interest rates haunted the global economic outlook, which is still entrenched in pessimism.

After U.S. equities concluded the previous session with modest gains for the day, MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.04% higher. This month, the index is down 3.6 %.

Australian equities were up 0.2 % in early trade, while Japan’s Nikkei market index was up 0.85 %. The yield on benchmark 10-year Treasury notes increased to 2.7883 % from 2.787 % on Friday in the United States.

The two-year yield rose to 2.5869 % from 2.583 %, reflecting traders’ anticipation of increased Fed funds rates.

Following the S& P 500’s 0.01 percent increase on Friday, market sentiment remains uncertain this week.
The Nasdaq fell 0.3%, while the Dow Jones Industrial Average increased 0.3%.

What happens to Asia-Pacific Stock

Despite the minor increases, the S& P 500 and the Nasdaq have now lost seven weeks in a row, the longest losing stretch since the dot-com bubble burst in 2001. The Dow has dropped for the eighth week in a row, the longest streak since the Great Depression in 1932.

Investors are concerned about inflationary pressures, as German wholesale inflation numbers released on Friday revealed a higher-than-expected increase, implying that prices will continue high shortly.

Germany’s producer price index increased 2.8 percent month over month in April, implying an annual rise of 33.5 percent.

In Australia, the Labor Party won a general election over the weekend, ending a nearly 10-year conservative government.

Despite Labor’s promises of climate, housing, and social welfare reforms, economists do not believe the change in government will have significant economic consequences.

“In our opinion, the incoming government offered little during the election campaign that necessitates us to reassess our economic estimates at this time,” CBA economists wrote on Monday.

“To put it another way, despite the change in national leadership, our economic forecasts and call on the RBA remain unchanged.”

The dollar increased 0.04 % against the yen to 127.9 in early Asian trade. It’s still a long way from its year-high of 131.34 on 2022-05-09.

The price of US crude fell 0.04 % to $110.24 per barrel. The price of Brent crude increased 0.23 % to $112.68 per barrel.

Concerns about global economic development have reawakened interest in gold.

“Gold prices rose for the first time in a week since mid-April, buoyed by concerns about economic growth amid high inflation,” according to ANZ analysts in a research note released on Monday. “A weakened dollar has improved investor confidence.”

Xpeng stock drops down ahead of earnings

Greater China markets fell in early trade, with Hong Kong’s Hang Seng index falling 1.31 %. The Hang Seng Technology index dropped 2.25 %. The Shanghai Composite fell 0.42%, while the Shenzhen Component fell 0.7%.

On Monday, Chinese electric vehicle manufacturer Xpeng will report its first-quarter earnings. In Asia trade, the company’s Hong Kong shares fell around 8%.

In other markets, South Korea’s Kospi was trading just above the flat line, while the Kosdaq was up 0.22 percent. MSCI’s broadest index of Asia-Pacific stocks outside Japan fell 0.37 %.

Stocks in the United States have taken a beating as markets become concerned about the possibility of a recession.

In the United States, the S& P 500 briefly fell into bear market territory on Friday, but recovered slightly to close nearly flat. The Dow Jones Industrial Average rose 8.77 points to 31,261.90, reversing a 600-point loss.

The Nasdaq Composite is already in the bear market territory, down 30% from its highs, and fell 0.3% on Friday. All three indices have a losing streak of at least seven weeks.


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