Source: AFP
Hong Kong led most Asian markets higher on Tuesday as traders returned from an extended weekend break on better-than-expected Chinese factory data that raised hopes for the world’s second largest economy.
However, a stronger-than-expected reading on US manufacturing and prices paid kept sentiment in check and raised questions about the Federal Reserve’s timing for rate cuts.
Focus now turns to the release of US jobs data at the end of the week, which could have an impact on the central bank’s decision-making in light of a recent batch of higher inflation readings.
Hong Kong’s Hang Seng stood out, piling up more than two percent in the first day of trading since Thursday, as investors cheered data showing China’s manufacturing grew more than forecast last month.
The news suggested the economy may have turned around after struggling for more than a year since zero-Covid measures were lifted, although observers remain hopeful of more stimulus and support for the troubled property sector.
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Markets mixed after US inflation data, China data gives boost
Chinese consumer tech giant Xiaomi led gains in Hong Kong, jumping as much as 15 percent on news that orders for its first electric vehicle — launched in Beijing on Thursday — had topped estimates.
The company received nearly 90,000 orders for the SU7 within 24 hours of its launch, Bloomberg News reported, adding that some predicted it could become as popular as Tesla’s Model 3 EV.
Most other regional markets were at the front.
Tokyo, Sydney, Seoul, Singapore, Taipei and Manila were in positive territory. Shanghai was slightly lower with Wellington and Jakarta.
Wall Street’s three main indexes closed mixed on Monday after the Institute for Supply Management’s index of factory activity showed expansion for the first time in March after 16 straight months of contraction.
But more worrying for investors was data showing prices paid hit their highest level since July 2022, fueling concerns that inflation could start to pick up and complicate the Fed’s plans to cut interest rates.
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Asian markets were mixed after the official delay of the Fed rate cut
Markets are now pricing in about 65 basis points of cuts this year, below the Fed’s guidance of 75 basis points.
US bond yields jumped on the data, putting upward pressure on the dollar.
The news came after the personal consumption expenditures (PCE) index accelerated, which Fed chief Jerome Powell said was “broadly in line with our expectations.”
Jose Torres at Interactive Brokers said: “Investors are indeed riding the lead of the possibility of another hawkish Fed pivot.
“The Fed’s first rate cut may finally arrive in the second half of the year — with the odds of a cut this June approaching the odds of a currency reversal.”
Gold was hovering around $2,250, having retreated from a record high of $2,265.73 on Monday triggered by hints from the central bank that credit conditions are easing. Demand for the safe haven has also been driven by geopolitical tensions, particularly in Europe and the Middle East.
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At a 34-year low against the dollar the gen
Oil prices extended Monday’s gains, fueled by concerns over supplies and Israel’s war against Hamas in Gaza.
Claims that Israeli airstrikes destroyed the consular annex of the Iranian embassy in Damascus — killing seven members of Iran’s Revolutionary Guard, including a top commander — fueled fresh fears.
Israel said it would not comment, but Iranian officials vowed a tough response, with fears of even further violence between Israel and Iran’s allies.
“Oil prices are soaring near five-month highs as geopolitical tensions remain rampant and the supply threat is now a key focus as Iran (begins) to become embroiled in the Middle East crisis,” Saxo’s Redmond Wong said.
He added that Mexico’s plans to freeze some exports are also playing on investor fears, while this week’s OPEC meeting will be closely watched.
Basics around 0300
Tokyo – Nikkei 225: UP 0.1 percent at 39,853.20 (break)
Hong Kong – Hang Seng Index: UP 2.4 percent at 16,938.28
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Asian markets mixed as traders weigh latest rally, data and earnings
Shanghai Composite: DOWN 0.1 percent at 3,074.36
Dollar/yen: UP to 151.71 yen from 151.65 yen on Monday
EUR/USD: DOWN to $1.0733 from $1.0746
GBP/USD: DOWN to $1.2543 from $1.2548
Euro/pound: DOWN to 85.57 pence from 85.61 pence
West Texas Intermediate: UP 0.4% to $84.01 a barrel
North Sea Brent crude: UP 0.3 percent at $87.69 a barrel
New York – Dow: DOWN 0.6 percent at 39,566.85 (close)
London – FTSE 100: Closed for holidays
Source: AFP