Asia-Pacific stocks rise; India’s central bank hikes key rate by 50 basis points, as expected

SINGAPORE – Shares in Asia-Pacific were mixed in Wednesday trade as the Reserve Bank of India’s raised a key interest rate.

The RBI will raise the policy repo rate by 50 basis points to 4.9% with immediate effect, Governor Shaktikanta Das said. The repo rate refers to the rate at which the central bank lends to commercial banks. Economists in a Reuters poll had predicted a rate hike of between 25 to 75 basis points.

“It may be noted in this context that the repo rate still remains below its pre-pandemic level,” the Indian central bank chief said.

Following the announcement, both the Nifty 50 and BSE Sensex in India slipped about 0.4% each. The Indian rupee traded at 77.6675 per dollar, weaker as compared to levels below 77.4 seen against the greenback last week.

The RBI’s decision comes after the Reserve Bank of Australia’s surprise 50 basis point rate hike on Tuesday.

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The Nikkei 225 in Japan advanced 0.93% while the Topix index climbed 1.15%.

Japan’s economy shrank an annualized 0.5% in the first quarter, revised government data showed Wednesday – an improvement over the initial estimate of a 1% contraction.

In Hong Kong, the Hang Seng index jumped 1.22% as Chinese tech stocks listed in the city soared: Alibaba surged 8.1% while Tencent climbed 4.68% and NetEase gained 2.99%.

The Shanghai Composite in mainland China edged 0.7% lower while the Shenzhen Component shed 0.911%.

South Korea’s Kospi was little changed. The S & P / ASX 200 in Australia rose 0.36%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.78% higher.

The World Bank on Tuesday cut its global growth forecast to 2.9% for 2022 and warned of the world economy slipping into a period of stagflation reminiscent of the 1970s.

“These sort of headlines – around risk of stagflation, slower growth – these are things the market has been, you know, trading on… for most of the year already,” Kieran Calder, head of equity research for Asia at UBP, told CNBC’s “Street Signs Asia” on Wednesday.

Calder described the World Bank’s expectation for 4.3% growth in 2022 for China as “pretty aggressive,” given that multiple banks have cut their outlook for the country. UBP is looking for “below 4% GDP growth” in China this year, he said.

Currencies and oil

The US dollar index, which tracks the greenback against a basket of its peers, was at 102,565 after seeing an earlier low of 102,387.

The Japanese yen traded at 133.12 per dollar, weaker than levels below 132 seen against the dollar yesterday. The Australian dollar was at $ 0.7198, off an earlier high of $ 0.7235.

Oil prices were higher in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 0.27% to $ 120.90 per barrel. US crude futures gained 0.36% to $ 119.84 per barrel.

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