Asian stocks gain after Fed minutes but China growth worries linger

BENGALURU: Asia's emerging market stocks advanced after initial hiccups on Thursday, as minutes from the U.S. Federal Reserve signalled the potential for a pause in rate hikes later this year, even as concerns over growth in China pressured local currencies.

Shares in Kuala Lumpur, Bangkok and Manila traded between 0.1% and 0.4% higher. Markets in Indonesia were closed for a public holiday.

Minutes from the last Fed meeting on May 3-4 highlighted the faith that policymakers' have in the strength of the U.S. economy, helping lift the mood on Wall Street overnight, but sentiment in equity markets remained fragile after weeks of volatile trade as central banks globally continue on the path of tightening to tame price spikes not seen in decades.

"Risk sentiments remain somewhat supported," analysts at Maybank said in a note.

In South Korea, the central bank delivered back-to-back interest rate hikes and forecast further aggressive increases to wrestle consumer inflation down from 13-year highs.

The Bank of Korea raised its benchmark policy rate by a quarter of a percentage point to 1.75%, the highest since mid-2019.

Shares in Seoul were down 0.2%, while the won weakened 0.1% Meanwhile, worries about a prolonged slowdown in China continued after Premier Li Keqiang held a rare high-profile meeting on stabilising the economy.

China's economic indicators have weakened sharply since March, especially in April, Li said, adding that economic difficulties in some aspects were even bigger than in 2020 when the economy was first hit by the COVID-19 outbreak.

"Li's warning on Chinese growth exerted downward pressures on yields and the yuan, with negative sentiment spilling over to AXJs," said Christopher Wong, FX strategist at Maybank.

China's 10-year benchmark yield fell to 2.763%, its lowest since mid-March. The yuan weakened 0.6%.

Currencies in the region were subdued even as the dollar hovered near a one month low.

Indian rupee and Thailand's baht traded in the red, while the Singaporean dollar and Philippine peso were flat.

Stocks in Singapore jumped 0.8%, a day after the city-state said its economy expanded more than initially estimated in the first quarter.

It did, however, add that annual GDP will likely be in the lower half of the forecast range.


** China's 10-year benchmark yield fell to lowest since March 14

** Taiwanese dollar hits lowest since May 5

** Stocks in Bangkok and Manila trade in positive territory - Reuters

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GDP , Federal Reserve , interest rates , economic , China


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