MELBOURNE- Asia’s share markets were mostly higher on Tuesday even as global investor attention remains fixed on the prospect of US interest rate hikes in the next few months, after two years of unprecedented pandemic-induced policy easing.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4 percent, after the US market was closed overnight for the Martin Luther King Jr. holiday. The index is up 1.1 percent so far this month.
Australian shares were up 0.29 percent, while in China the blue chip CSI300 Index rose 0.33 percent in early trading.
Hong Kong’s Hang Seng Index was up by 0.61 percent.
Japan’s Nikkei stock index was trading 0.63 percent higher ahead of the Bank of Japan’s decision.
The Japanese central bank is not expected to change its ultra low rates stance but its inflation forecasts are likely to be increased for 2022.
Ahead of the meeting’s outcome, the dollar was trading against the yen at 114.51. It is still some distance from its low this year of 113.49 last week.
The US Federal Reserve is due to meet Jan. 25-26 and while it is not expected to shift rates then, a growing number of investors think March will be the start of a tightening cycle.
Rate rises are generally seen as negative for riskier assets such as equities.
“Investors’ focus remains on the Fed and the pace at which they raise rates,” John Milroy, adviser at brokerage Ord Minnett in Sydney, told Reuters.
“We think it will be faster than markets currently expect. Boom conditions remain in the US with a tight labor market. Good for world growth but adds to the inflationary pressures.”
