Minutes of RBA Meetings in Australia, Oil and Currency

SINGAPORE – Asia-Pacific markets were mostly good on Tuesday, as bitcoin continued to rise after a recent rebound. Meanwhile, Australia’s central bank says inflation will peak towards the end of the year.

Japanese equities delivered gains, with the Nikkei 225 traded 1.84% higher to close at 26,246.31 while the Topix also rose 2.05% to close at 1,856.20. Shares of conglomerate SoftBank Group rose nearly 3%.

The Taiwan Taiex Index also rose more than 2%, ending at 15,728.64.

Hong Kong Hang Seng Index climbed 1.66% from last hour of trading, with tech stocks Tencent and Ali Baba book profits of 2.27% and 1.25% respectively.

Mainland Chinese stocks struggled for gains, with the Shanghai composite dip of 0.26% to close at 3,306.71 while the Shenzhen component: was 0.51% lower at 12,423.86.

The central banks have a playbook and that playbook tells them that if inflation is 8.5%, if we want to kill inflation, we have to raise interest rates above 8.5%…

Mark Mobius

Mobius Capital Partners

The Kospic in South Korea was also positive, trading 0.75% higher to end at 2,408.93.

Australia’s S&P/ASX 200 rose 1.41% to close out the day at 6,523.80. The broadest MSCI index of stocks in Asia Pacific outside of Japan rose 1.37%.

Australia signals more rate hikes ahead

Reserve Bank of Australia governor Philip Lowe said in a speech that he expected inflation in Australia to peak at around 7% by the end of the year as pandemic-related supply chain disruptions disappear.

Lowe said monetary policy tightening and interest rate hikes around the world would work together to curb inflation by balancing supply and demand for goods.

“Achieving that balance is not easy and there are risks involved, but higher interest rates will ease current inflationary pressures,” he said, adding that Australia should expect more rate hikes as the RBA has committed to backtracking. to inflation levels of 2% to 3%.

Minutes released this morning showed the bank was leaning toward more tightening amid a resilient economy with record-low unemployment rates.

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After a holiday on Monday, US markets will return to trading on Tuesday. Major averages suffered their 10th week of losses in 11 last week on fears that the central bank would raise interest rates aggressively to contain inflation, risking an economic downturn. The S&P 500 fell 5.8% last week for its biggest weekly loss since March 2020, diving deeper into bear market territory.

“In reality, and after close scrutiny, market movements generally exhibit the characteristics of measured shortcovering after last week’s brutal sell-off, not unbridled amplification,” Mizuho Bank’s Tan Boon Heng said in a note.

Meanwhile, Federal Reserve Chairman Jerome Powell is expected to give his semi-annual testimony to Congress this week.

“It’s not hard to imagine Fed Chairman Powell being rapped and held accountable on the political hot potato issues of inflation,” Tan said. “In response, Powell can reiterate his recent statement about the Fed’s desire and commitment to an ‘unconditional’ attack on inflation.”

Mark Mobius of Mobius Capital Partners told CNBC’s “Squawk Box Asia” on Tuesday that it is likely that US interest rates could rise as much as 9%.

“The central banks have a playbook and that playbook tells them that if inflation is 8.5%, if we want to kill inflation, we need to raise interest rates above 8.5% so that the real interest rate is better than eight and a half. So you’re looking at a 9% interest rate,” he said.

Currencies and Oil

Oil prices were higher in the afternoon of trading hours in Asia against the international benchmark Brent crude futures up just over 1% to $115.32 a barrel. US crude futures also rose 1.15% to $110.82 a barrel.

The World’s Largest Cryptocurrency bitcoin got up the following Monday dropped below 2017 high over the weekend† It climbed above $20,000 for most of the day. On Tuesday during trading hours in Asia, bitcoin last rose about 5.64% to about $21,179, according to data from Coin Metrics.

The US dollar indextracking the greenback against a basket of its ilk was last at 104.166.

The Japanese Yen traded at 135.19 per dollar, weakening from levels below 134 seen last week. The Australian dollar was at $0.6981, still softer than last week’s trade off $0.70.

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