ASIAN currencies and stocks climbed on Wednesday after upbeat facto
ASIAN currencies and stocks climbed on Wednesday after upbeat factory activity data from China signalled a steady recovery in the world’s second-largest economy and lifted sentiment while investors assessed prospects of rising interest rates.
Thailand’s baht strengthened 0.7% and was set to mark its best session since Jan. 13.
The Singapore dollar appreciated 0.2%, while Malaysia’s ringgit firmed 0.1%.
Equities in Manila and Taipei climbed 0.6% each, while Bangkok shares inched 0.1% higher.
Data showed China’s manufacturing activity expanded at the fastest pace in more than a decade in February, smashing expectations as production zoomed after the lifting of COVID-19 restrictions late last year.
“For now, the market is reminded that China’s recovery is showing no signs of faltering,” said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken.
The yuan rose 0.4%. Equities in Shanghai advanced 0.7%.
“The data will provide some relief to global risk sentiment, but it will be difficult to counteract the intensification of negative sentiment amid higher-for-longer Fed rate expectations,” said Mitul Kotecha, head of EM Strategy at TD Securities.
A slew of upbeat U.S. economic data in recent weeks has heightened expectations that the Federal Reserve would hike rates to a higher level than market forecasts and keep them elevated for longer than was initially expected.
Fed fund futures suggested rates peaking at around 5.4% by September, with a likely 50 basis point (bps) hike in March.
Meanwhile, Indonesia’s annual inflation picked up slightly in February, but its core inflation decelerated more than expected. At its February policy meeting, Bank Indonesia said the current benchmark rate level of 5.75% was sufficient to get headline inflation to return to the target band of 2% to 4% in September.
“With USDIDR staying relatively well-behaved and policymakers signalling that policy rate hikes delivered thus far are sufficient to keep inflation pressures in check this year, we continue to expect no further policy rate hikes in coming months,” Goldman Sachs analysts said in a note.
The rupiah and stocks in Jakarta were flat.
In India, the rupee rose 0.2% and shares gained 0.7%. The country’s economic growth slowed further in the December quarter, data showed on Tuesday.
However, the government retained its growth forecast of 7% for 2022/23, while revising higher growth for the previous year to 9.1% from the earlier 8.7%. Economists expect the Reserve Bank of India to raise rates by 25 bps in April, which could hurt growth in the coming quarters.
HIGHLIGHTS:
** Philippine annual inflation was likely within a range of 8.5% to 9.3% in February, the central bank said on Tuesday
** Thailand’s economy is expected to grow 3.0% to 3.5% this year, according to a leading joint business group
** Indonesia’s 10-year benchmark yields up 1.4 bps at 6.885%; India’s 10-year benchmark yields up 1.1 bps at 7.468% – Reuters
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