Asia stocks up ahead of Powell speech, Chinese tech adds support

A vehicle drives past a screen displaying the Hang Seng Stock Index in the Central District, Hong Kong, China, July 19, 2022. – Reuters pic

Friday August 26, 2022 11:27 GMT

WASHINGTON, Aug. 26 — Asian markets rose Friday after a rally on Wall Street ahead of a speech by Federal Reserve boss Jerome Powell, who is expected to reiterate his plan to hike interest rates to fight inflation.

Adding to strong buying sentiment are signs of progress in talks between US and Chinese regulators that could see tech titans like Alibaba and JD.com avoid delisting from New York.

Global stocks have faltered in recent weeks after a nearly two-month rally from their June lows as a series of Fed officials lined up to reaffirm their commitment to tightening monetary policy, despite some promising economic data.

All eyes are now on Powell’s remarks later Friday at the annual Top Bankers and CFOs Symposium in Jackson Hole, Wyoming.

Most expect him to confirm that more hikes are on the way as officials try to bring inflation down from painful highs not seen in four decades.

Analysts said while a number of board members aligned this week, the hawkish tilt was largely priced into market prices.

The key question now is how much the bank will tighten over the next few months, with expectations for a half-point hike next month, following two three-quarter moves in June and July.

All three major Wall Street indexes ended well up on Thursday, with the Nasdaq and S&P 500 more than 1% from the good.

And Asia followed suit, with Tokyo, Sydney, Seoul, Singapore, Taipei and Wellington all doing well.

Technological boost between the United States and China

Hong Kong and Shanghai were among the best performers with a surge in tech companies on news of advancing US-China regulatory talks.

More than 200 Chinese companies have been threatened for months with delisting from New York as they become embroiled in a wide-ranging superpower feud.

But reports said on Thursday that Beijing had called on major accounting firms to prepare to bring audit documents from U.S.-listed companies to Hong Kong, for review by U.S. officials.

US lawmakers have set a 2024 deadline for removing companies that don’t meet listing rules and the latest ruling could be a big step towards avoiding that.

“To see that both parties are communicating is a good thing,” said Daisy Li, at EFG Asset Management.

“Nevertheless, we will have to see if the US side is actually willing to accept the disclosure. If this can be resolved, it could help reduce some (of) the geopolitical risk premium of the Chinese market.” The reports came as China announced its intention to stimulate its flagging economy by injecting tens of billions of dollars to boost lending, consumption and investment.

However, analysts warned that while the injection of cash will be welcome, investors were more keen to see an easing of zero-Covid policies that have led to major cities and struggling industries being locked down. —AFP

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