From India to Japan, stock markets give a thumbs up to Fed hike

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Most major Asian stock markets are treading positive, with investors taking the US Fed hike in their stride. Will this upbeat mood continue until the next hike, due in July? Image Credit: AP

Dubai: Asian stock markets from India to Japan have shaken off concerns they may have had about aggressive interest rate hikes by the US Fed, with all the major indexes in positive territory except for the Hang Seng. Even there, the dip is below 100 points.

Investors on DFM and ADX were thinking along the same lines as their Asian peers, factoring in the overnight rate hike and the next one in July. The UAE’s general indices, which closed positive yesterday, started Thursday on solid ground, with DFM up 0.36 per cent and ADX by 0.50 per cent in the initial minutes. While ADX is currently down 0.28 per cent, the analyst consensus is that for now worries about entering a bear market have been discounted.

On DFM, investors will also size up the opening of subscriptions for the Tecom group IPO, which provided its price range early Thursday. Another heavily over-subscribed IPO is in the works, analysts say, and with Tecom still exercising the rights to expand the IPO size during this period. Tecom’s dividend yield suggests a 6-6.5 per cent.

Sensex brightens up

After starting bright, India’s benchmark index, the Sensex, is down 359 points (at 10.50am UAE time). “As always, there’re options for value picks if NRI buyers are looking for something to hold long-term,” said K.V. Shamsudeen, Director at Burjeel Geojit Securities, based in Sharjah. “Those, according to me, would be shares of Ambuja Cement, Asian Paints and Hindustan Lever.

“Despite the bounce today, the Indian rupee and stock markets will remain soft short-term. The dollar’s strength will see to that.”

So, is today’s upbeat showing strictly a short-term affair? Or will gyrations of the sort seen at the start of the week become more frequent closer to the next Fed meeting in July – and the inevitable hike?

“The Fed may deliver one more 75 basis point rate increase, but traders are doubting we will see a steady stream of super-sized hikes,” said Edward Moya, Senior Market Analyst at Oanda.

If it pans out this way, that should be just fine with investors.