By
Godfrey Benjamin
November 15th, 2023
With the growing imbalance in the global economy, the Asia-Pacific stocks saw a better trading day on Tuesday as most indices close up positive.
The Nikkei Stock Average, or the Nikkei index, Nikkei 225 (INDEXNIKKEI: NI225) closed Tuesday’s session with a 1.84% gain to 26,246.31.
The Tokyo Stock Price Index TOPIX (INDEXTOPIX: TOPIX) also charted a very impressive growth curve, rising by 2.05% to 1,856.20. Other major indices in the Asia-Pacific region were not left hanging as Japan’s stocks took the leap. The Taiwan Capitalization Weighted Stock Index (TPE: TAIEX) went on the bounce on Tuesday as it grew 2.34% to 15,728.64.
Hong Kong’s Hang Seng Index (INDEXHANGSENG: HSI) gained 1.87% to 21,559.59 and the only exceptions to the encompassing growth recorded in the region came from mainland China where both the Shanghai Composite, SSE Composite Index (SHA: 000001) and the Shenzhen Component, SZSE Component Index (SHE: 399001) slipped 0.26% and 0.51% respectively.
In addition, while the South Korean Kospi Composite index, KOSPI (KRX: KOSPI) recorded a 0.75% growth to 2,408.93, the Australian S&P/ASX 200 (INDEXASX: XJO) also capped the positive sentiment in the region with a 1.41% growth to 6,523.80.
Growing Asia-Pacific Stocks Amid Inflation Fight
Just as it is in many parts of the globe, economies in the Asia-Pacific region are experiencing a massive stocks onslaught due to the menacing increase in inflation. Irrespective of the current growth in inflation at this time, Philip Lowe, the governor of the Reserve Bank of Australia (RBA) said in a speech recently that he expects inflation to attain a peak of 7% before the end of the year.
The RBA is arguably doing all it can to tame inflation as best as it could as Lowe confirmed that monetary policies will continually be tightened until a significant reduction is recorded. With a targeted inflation dip of 2 – 3%, the RBA is committed to maintaining the balance between supply and demand through its targeted interest rate hike.
“Achieving that balance is not straightforward and there are risks involved, but higher interest rates will lessen the current inflationary pressures,” Lowe said.
The biting inflationary measures are taking another twist in the United States where experts believe that the Federal Reserve may have to increase interest rates beyond 8% in order to taper down inflation to a significant level.
The United States indices are reflecting the realities of the current economic terrain as the S&P 500 Index (INDEXSP: .INX) dropped by as much as 5.8% last week, the lowest weekly fall recorded since March 2020
“In reality, and upon scrutiny, market moves by and large bear the hallmarks of measured short covering after the brutal sell-off last week, not unbridled strengthening,” Mizuho Bank’s Tan Boon Heng said in a note.
There is a belief that the only way the global economy will be freed from the menacing post-COVID-19 supply chain pressures and its accompanying inflation hike will be by a complementary hike in interest rates and tightening monetary policies across the board.