Reserve Bank of Australia meeting minutes, oil and currencies

SINGAPORE – Asia Pacific markets were mostly bullish on Tuesday while Bitcoin continued to rally after the recent recovery. Meanwhile, the Reserve Bank of Australia says inflation will peak by the end of the year.

Japanese stocks led the gains, with Nikkei 225 Topix rose 1.84% to close at 26246.31 while Topix rose 2.05% to close at 1,856.20. Shares of the SoftBank Group rose nearly 3%.

Taiwan’s Taiex also rose more than 2% to end at 15,728.64.

Hong Kong Hang Seng Index It’s up 1.66% as of the last hour of trading, with technology stocks Tencent And the Ali Baba It posted gains of 2.27% and 1.25%, respectively.

Stocks in mainland China struggled to gain, with Shanghai boat It declined by 0.26% to close at 3306.71 while Shenzhen Component It sat 0.51% lower at 12423.86.

Central banks have a playbook and this book tells them if inflation is 8.5%, if we want to eliminate inflation, we have to raise interest rates above 8.5%…

Marc Mobius

Mobius Capital Partners

The Cosby South Korea was also in positive territory, trading 0.75% higher to close at 2408.93.

Australia S & P / ASX 200 It rose 1.41% to end the day at 6,523.80. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.37%.

Australia points to more rate hikes ahead

Reserve Bank of Australia Governor Philip Lowe said in a speech that he expects inflation in Australia to peak at around 7% by the end of the year as supply chain disruptions linked to the pandemic resolve.

Lowe said that tightening monetary policy and raising interest rates globally will work together to reduce inflation by creating a balance between supply and demand for goods.

“Achieving this balance is not easy and there are risks, but higher interest rates will reduce the current inflationary pressures,” he said, adding that Australia should expect further rate increases with the RBA committed to returning to inflation levels of 2% to 3%. .

The minutes released this morning showed that the bank is leaning towards further tightening amid a resilient economy with record low unemployment rates.

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US markets are scheduled to return to trading on Tuesday after Monday’s holiday. The major averages last week suffered a 10 out of 11 week loss on concerns that the central bank could aggressively raise interest rates to tame inflation at the risk of causing economic deflation. The S&P 500 fell 5.8% last week, posting its biggest weekly loss since March 2020, falling deeper into bear market territory.

“Indeed, after scrutiny, market moves are largely bearing the hallmarks of short-covering measured after last week’s tough sell-off, not runaway consolidation,” 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 feeling questioned and accountable for the hot political potato issues of inflation,” Tan said. In response, Powell may repeat his latest statement about the Fed’s willingness and dedication to an ‘unconditional’ attack on inflation.

Speaking to CNBC’s Squawk Box Asia on Tuesday, Mark Mobius of Mobius Capital Partners said there is a possibility that US interest rates will rise to 9%.

“Central banks have a playbook and this book tells them if inflation is 8.5%, if we want to eliminate inflation, we have to raise interest rates above 8.5% so that the real rate is better than eight and a half. So you look at 9% interest rates.”

Currency and oil

Oil prices rose in the afternoon of Asian trading hours with the international benchmark Brent crude futures contracts Just over 1% to $115.32 a barrel. US crude futures contracts It also rose 1.15% to $110.82 a barrel.

The largest cryptocurrency in the world Bitcoin Monday rose after Below its 2017 high over the weekend. It climbed above $20,000 most of the day. On Tuesday during Asian trading hours, bitcoin recently gained about 5.64% to around $21,179, according to Coin Metrics data.

The US dollar indexwhich measures the US currency against a basket of peers, was last at 104.166.

The Japanese Yen It traded at 135.19 per dollar, down from levels below 134 seen last week. The Australian dollar It was at $0.6981, still weaker than last week’s trading above $0.70.