Asian stocks gain as prospects of China recovery, and Fed caution

HONG KONG: Asian shares rose on prospects for a steady economic recovery in China, and after Wall Street reversed losses overnight following remarks by the Atlanta Federal Reserve chief that signalled a measured approach raising U.S. interest rates.

Global markets have been buffeted by a raft of strong US data over recent weeks, including US jobless claims overnight, that suggested the Fed would need to keep rates higher for longer. 

But investors breathed a sigh of relief after Atlanta Federal Reserve President Raphael Bostic said he favoured “slow and steady” quarter-point US rate increases to limit risk to the economy.

Investors were also waiting to see what economic targets are set by China’s parliament, and who it elects to top economic posts. The parliament’s annual meeting opens on Sunday.

Investors’ appetite for holding riskier assets has improved lately on signs that the world’s second-biggest economy is making a steady rebound after the government ditched stringent Covid controls in December.

Read more: Saudi companies to invest $51 billion under government-backed plan

“Everyone is eyeing China’s growth target for 2023 and wondered whether it would be 5%, 5.5% or even as high as 6%. The figure would represent the size of the government’s policy stimulus. That’s what the market and investors care about the most,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.

European markets were set for a higher open, with pan-region Euro Stoxx 50 futures up 0.59%, German DAX futures up 0.39% and FTSE futures advancing 0.31%.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.7%, on track for its first weekly rise in five. The index is up 1.6% so far this month. U.S. stock futures, the S&P 500 e-minis , were down 0.13%, but the major indexes ended up in regular trading overnight.

Australian shares (.AXJO) were up 0.39%, helped by gains in miners and financials, while Japan’s Nikkei stock index (.N225) rose 1.57%, jumped to its highest in nearly three months.

China’s blue-chip CSI300 index (.CSI300) was up 0.2% in afternoon trade while the Shanghai Composite Index (.SSEC) gained 0.34%. Hong Kong’s Hang Seng index (.HSI) advanced 0.89%.