Asian stocks higher ahead of possible US rate hike

Oil rose by more than USD 1 per barrel. Wall Street ended up 0.1 percent on Monday ahead of this week's Fed meeting at which officials are expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin.

Asian stock markets were mostly higher on Tuesday as investors braced for another sharp interest rate hike by the Federal Reserve to cool inflation.

Shanghai, Hong Kong, and Seoul advanced. Tokyo edged lower. Oil rose by more than USD 1 per barrel.

Wall Street ended up 0.1 percent on Monday ahead of this week's Fed meeting at which officials are expected to announce a rate hike of up to three-quarters of a percentage point, triple the usual margin. That would put the Fed's benchmark rate in a range of 2.25 percent to 2.5 percent, the highest since 2018 before the coronavirus pandemic.

Mixed market reactions suggest investor sentiments are split and optimists hope for a "Fed dial back," said Tan Boon Heng of Mizuho Bank in a report.

The Shanghai Composite Index rose 0.6 percent to 3,270.31 while the Nikkei 225 in Tokyo shed less than 0.1 percent to 27,581.73. The Hang Seng in Hong Kong gained 1.4 percent to 20,808.56.

Alibaba, China's biggest e-commerce company said Tuesday it plans to apply for a primary listing in Hong Kong. The move would make Alibaba a dual-primary listed company on the New York Stock Exchange and the Hong Kong Stock Exchange. Alibaba went public in New York in September 2014 and completed a secondary listing in Hong Kong in November 2019.

CEO Daniel Zhang said the company was pursuing another primary listing venue to foster a wider, diverse investor base. That would appear to be mainly mainland Chinese investors. The Kospi in Seoul added 0.3 percent to 2,408.85 and Sydney's S&P-ASX 200 was 0.1 percent higher at 6,798.00. New Zealand retreated while Southeast Asian markets gained.

Investors worry aggressive rate hikes by the Fed to contain inflation that is at four-decade highs and similar action by central banks in Europe and Asia might derail global economic growth.

US inflation has accelerated to 9.1 percent, its highest since 1981.

The US economy is slowing, but healthy hiring shows it isn't in recession, Treasury Secretary Janet Yellen said Sunday. Fed officials who have publicly supported a rate hike also cite a relatively strong job market as evidence the economy can stand higher borrowing costs.

On Wall Street, the S&P 500 advanced to 3,966.84 Monday. The Dow Jones Industrial Average rose 0.3 percent to 31,990.04. The Nasdaq Composite fell 0.4 percent to 11,782.67.

The major indexes are coming off solid gains last week following a mix of mostly better-than-expected reports on corporate profits. On Monday, Walmart shares fell nearly 10 percent in after-hours trading after the retail giant lowered its profit outlook for the second quarter and full year. The company said shoppers are cutting back on discretionary items, particularly clothing, that carry higher profit margins. On Thursday, the Commerce Department is due to release its first estimate of US economic growth in the three months ending in June. Some forecasters expect the second quarter of contraction after output shrank 1.6 percent in the three months ending in March.

Also this week, tech heavyweights Apple, Meta, Microsoft, and Amazon are due to report results. So are Coca-Cola and McDonald's.

In energy markets, benchmark US crude rose from USD 1.62 to USD 98.32 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained USD 2 to USD 96.70 on Monday. Brent crude, the price basis for international trading, advanced from USD 1.80 to USD 101.99 per barrel in London. It added USD 1.95 in the previous session to USD 105.15.

The dollar declined to 136.49 yen from Monday's 136.72. The euro rose to USD 1.0237 from USD 1.0221.