Asian indices grow on hopes for support from governmentAsia-Pacific stock indices showed mixed trading during Tuesday's session. The Chinese Shanghai Composite and Shenzhen Composite indices increased by 0.12% and 0.06% respectively, while Hong Kong Hang Seng Index showed a rather significant decline of 1.88%. All other regional indicators rose. The Japanese Nikkei 225 index added 0.64%, the Korean KOSPI index gained 0.96%, and the Australian S&P/ASX 200 index increased by 0.52%.
The main reason for the growth of Asian indices was the message of the Central Bank of China about the creation and the soon involvement of a series of measures to state support of enterprises, which were most affected by restrictions related to the spread of coronavirus in the country.
There will also be an increase in lending in regions with a low rate of credit growth. It is suggested that more credit be given to firms engaged in transporting essential goods during the pandemic.
At the same time, there has been an increase in government regulation of companies involved in the technology sector.
The Chinese companies whose securities added in value are Link Real Estate Investment Trust gaining 1.55%, CNOOC, Ltd. increasing by 1.4%, and PetroChina Co. adding 1.2%.
The Nikkei 225 was boosted by the declining yen. This is more beneficial for exporting companies as it increases their potential income.
In February 2022, there was an increase in Japan's industrial production by 2%. In January, this indicator showed a decline of 2.4%. At the same time, the indicator exceeded the forecasts of experts, who assumed that the growth would be only 0.1%.
Meanwhile, investors remain concerned about rising energy and food costs. They lack confidence that central banks can combat inflation without undermining business activity in their states.
Among the companies on the Japanese index, Pacific Metals Co. added 8.4%, Sumitomo Osaka Cement Co. gained 5.2%, and Mazda Motor Corp. increased by 4.8%.
Other Japanese companies showed smaller increases. Toyota Motor Corp. added 1.3%, and Toshiba Corp. jumped by 1.5%. SoftBank Group Corp. dropped by 1.7%, and Fast Retailing Co. decreased by 1.5%.
Among the companies on the KOSPI index, Samsung Electronics Co. added 1.35%, and Hyundai Motor Co. increased by 1.1%. However, Kia Corp. grew only by 0.1%.
Among the components of the S&P/ASX 200 index, BHP Group, Ltd. jumped by 1.3%, and Rio Tinto, Ltd. increased by 1.5%.
Gold quotes fell to more than a week's lowSt. Louis Federal Reserve President James Bullard sees no need for the Fed to raise interest rates by more than 50 basis points. However, the central bank has previously raised interest rates more strongly, and therefore Bullard does not rule out a potential increase of 75 basis points.
Meanwhile, Federal Reserve Bank of Chicago President Charles Evans said on Tuesday that federal funds rates could reach 2.5% by the end of the year.
June COMEX gold futures closed down $27.40, or 1.4%, at $1,959 an ounce, the lowest since April 11, while May silver futures fell 76 cents, or 2. 9%, to $25.391 an ounce.
As a result of Monday's session, gold reached the closing high for the most actively traded contracts since March 10. That day, trading ended at a 19-month high of $2,000.40, according to Dow Jones data.
Gold prices rose in six of the last seven sessions, despite rising Treasury yields and a stronger dollar. Rising bond yields increase the opportunity cost of owning gold, which does not generate coupon income. At the same time, the strengthening of the dollar makes commodities denominated in this currency more expensive for holders of other currencies.
The dollar continued to rise on Tuesday: the ICE dollar index, which tracks the dynamics of the US currency against a basket of six other currencies, reached a maximum since March 2020. The Japanese yen fell sharply against the dollar as the BOJ remains overly loose as the US Federal Reserve prepares to sharply raise interest rates and cut its asset balance in an attempt to contain rising inflation.
Meanwhile, gold is gaining support amid the Russian-Ukrainian conflict. Gold is considered a safe-haven asset during times of geopolitical uncertainty.
Technical analysis shows the potential for growth in gold prices, Otunuga notes, but quotes, apparently, are forming a new range. Support is located around $1960 and resistance is at $2000. In the event of a fall below $1960, prices could drop to $1920. In the event of a break above $2,000, the quotes may test the strength of the resistance levels located at the levels in 2009, 2015 and 2050 dollars.
Meanwhile, May copper futures ended the day down 1.8% at $4.718 a pound. July platinum futures fell 3.1% to $988.70 an ounce, while June palladium contracts fell nearly 2.7% to $2,380.40 an ounce.
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