Asian markets grapple with Fed's decision to sustain high interest rates

  • Stock Market News
Asian markets grapple with Fed's decision to sustain high interest rates
Credit: © Reuters.

Monday saw Asian markets demonstrating relative stability as traders assessed the Federal Reserve's decision to maintain high interest rates. The Japanese market made a comeback, with stocks opening higher. At the same time, oil prices saw a surge due to heightened speculation on supply restrictions. However, Australian markets experienced a downward trend, driven by concerns over prolonged global interest rate hikes.

Officials from the Federal Reserve expressed their doubts on Monday about overcoming inflation issues, suggesting an extended period of stringent monetary policy might be on the horizon. This came after global equity markets were in a slump last week. The Sensex and Nifty 50 indices in India fell by more than 2.5%, ending a robust three-week rally, triggered by the US Federal Reserve's indication that high-interest rates would persist for an extended period.

Despite the overall decline, certain stocks showed resilience last week. Blue Star (NS: BLUS ), Berger Paints (NS: BRGR ) & REC (NS: RECM ) Ltd outperformed despite Sensex & Nifty 50 falling by 2.4%. These companies gained on QIP, bonus & SPV monetisation with Blue Star trading at 42 times its earnings (P/E), Berger Paints at 68 times its earnings and REC at six times its earnings and 1.85 times its book value (P/B).

On Monday, India's key stock market indices, Sensex and Nifty, along with BSE, NSE, and share prices underwent significant changes. Public Sector Undertaking (PSU) stocks such as IRFC, RVNL, ITDC, and Mazagon Dock have been recommended for sale given the current favorable conditions. The BSE PSU index has been one of the top performers over the past year due to various factors that have led to an optimistic outlook on the sector.

Japanese stocks opened higher on Monday, with the Nikkei 225 index gaining 0.29%, or 95.22 points, reaching 32,497.65 at 6:55 am IST. The broader Topix index added 0.21%, or 5.34 points, reaching 2,381.61.

Meanwhile, oil prices continued to ascend for the second day in a row as hedge funds amplified their bets on shrinking supplies, foreseeing a resurgence of the recent rally. Conversely, Australian stocks broadly declined on Monday due to concerns over continued global interest rate hikes. The S&P/ASX 200 index dropped by 0.35% to 7,044.3, with mining and gold stocks contributing significantly to this fall.

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