Indian equity benchmarks started on a bad note on Friday and slumped a bit after closing at a new high in the previous session, even as investors looked to end the week on a high, while other Asian stocks are on track to post their fourth straight weekly gains .
The BSE Sensex index fell 44.47 points to 62,247.95 in early trading after closing at a new high of 62,272.68 on Thursday.
The broader NSE Nifty also fell 0.09 percent lower to 18,467, a day after closing at a record high of 18,484.10.
Equity markets in Asia and the Pacific were uneven, with the Australian benchmark posting a 0.35 percent gain, but confidence in other parts of the region was hurt by a tech-driven sell-off in Hong Kong stocks.
“After seeing how the market has reacted — stocks are rising, bond yields are falling and the dollar is weakening — if I were the Fed, I think I better say something really aggressive now, because otherwise the last 75 basis points of tightening I have done are essentially pointless, and the next 50 will just be gobbled up by the market saying, ‘Don’t worry, the pivot is coming,'” Rob Carnell, regional head of research for Asia-Pacific at ING, told Reuters .
“You want your rate hikes to mean something, so I think once everyone has digested their turkey and gone back to work — probably early next week — we’re going to hear some pretty aggressive stuff coming out of the Fed.”
While some stock markets in Asia were buoyed by predictions of a slower pace of monetary tightening in the US starting as early as next month, Hong Kong’s Hang Seng collapsed after a record number of COVID-19 infections in China cast doubt on the future .
China announced record high COVID infection rates on Thursday, and cities across the country implemented local lockdowns, mass testing and other restrictions. This crushed recent expectations that the world’s second-largest economy would abandon strict zero-COVID policies and accept the disease.
“Investors are rightly concerned,” added Mr. Carnell from ING to it. “They still don’t have the adequate health network that would allow them to handle a full-blown outbreak where many people are getting sick.”
Still, the outlook for China’s markets is improving despite the current flare-up in virus cases, Jun Bei Liu, portfolio manager at Tribeca Investment Partners, said according to Bloomberg.
“In the next 12 months things will get better. We’ve seen this playbook before in other economies,” she said on Bloomberg Television. “We will start to see outperformance very quickly in the coming quarters.”
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