Markets in Asia recover from Fed sell-off

The Asian markets closed higher on Tuesday, offering a glimmer of hope for investors who have been on edge due to the recent sell-off in the wake of rising concerns about U.S. interest rates. This month’s market rally came to a halt as investors are now grappling with the possibility of an extended period of high borrowing costs, aimed at controlling inflation which has reached multi-decade highs.

Despite indications of slowing price increases, the recent employment data report released last Friday, which showed the creation of over half a million new jobs in January, has raised fears that the Federal Reserve may have to announce further interest rate hikes this year. Investors are now focused on the upcoming speech by Fed chairman Jerome Powell, and will be closely watching for any changes in his tone following last week’s policy decision.

Atlanta Fed president Raphael Bostic warned that if the economy continues to display strength, it will likely result in more interest rate hikes. He noted that rates could top out at 5.1 percent, or even higher, depending on the economic situation.

On the other hand, Wall Street ended in the red, but Asia saw some positive growth, with markets in Hong Kong, Tokyo, Shanghai, Sydney, Seoul, Singapore, Taipei, and Jakarta all closing higher. The market is also keeping an eye on the recent development of the United States shooting down a suspected Chinese spy balloon that was floating over the country. The debris from the incident is being analyzed by intelligence experts, and there are no plans to return the remains to China.

Investors are getting increasingly concerned about U.S.-China tensions, as China was once seen as a favored investment option, but rising tensions and the possibility of blacklisting have made investors wary. The Dow closed 0.1 percent lower at 33,891.02, while the FTSE 100 closed 0.8 percent lower at 7,836.71.

As of 2:30 GMT, the Nikkei 225 in Tokyo was up 0.2 percent at 27,754.36, the Hang Seng Index in Hong Kong was up 1.0 percent at 21,441.50, and the Composite in Shanghai was up 0.1 percent at 3,242.93. The dollar-yen rate was down, while the euro-dollar and pound-dollar rates were up. The price of West Texas Intermediate crude oil was up 0.9 percent at $74.76 per barrel, and the price of Brent North Sea crude was up 0.8 percent at $81.66 per barrel.