China Leads the Way as Asian Markets Brace for Fed Rate Hikes

Asian shares followed the trend of Wall Street and declined on Thursday, as various Federal Reserve speakers, including Chair Jerome Powell, indicated that interest rates will increase, decreasing risk appetite.

This caused the dollar to stay near its one-month high. Meanwhile, Chinese shares outperformed, as concerns about the spy balloon incident decreased and some analysts improved their growth forecasts for China.

The MSCI’s broadest index of Asia-Pacific shares outside of Japan went down by 0.1%, with gains in Chinese shares compensating for some of the losses in other areas.

Swiss bank UBP revised its forecast for this year from 5.2% to 6%. Relations between China and the US seem to have stabilized for now, as President Biden stated that they have not taken a big hit after the suspected Chinese spy balloon was taken down by the US.

However, the sentiment was negatively impacted as Alphabet’s shares fell 7.7% after the new AI chatbot made an incorrect statement. The bond market rallied after being caught off guard by the strong US jobs report in January.

The dollar index went down by 0.1%, while Brent crude and US WTI crude also decreased by 0.1%. Gold was slightly higher, trading at $1,879.55 per ounce.