Asia’s stock markets edged higher on Wednesday for their fourth straight session, but the recent rally lost momentum as doubts about inflation, and rate hikes drew attention to bits and pieces of good news about the global growth outlook.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.5% and is on its longest winning streak since February. Japan’s Nikkei (.N225) rose 0.6%, and miners pushed Australian shares (.AXJO) up nearly 0.9% higher.
Gains followed a surge on Wall Street and a fall in the dollar as investors pushed concerns about inflation and recession to the back of their minds.
But analysts were sceptical it could last, and both the greenback and futures in Asia were stable. S&P 500 futures fell 0.2%, Nasdaq 100 futures fell 0.4% while FTSE futures were flat and European futures rose 0.2%.
“After plunging into last week, shares could have a further near-term bounce,” said Shane Oliver, chief economist and head of investment strategy at Australia’s AMP Capital.
“But risks around inflation, monetary tightening, the war in Ukraine and Chinese growth remain high and still point to more downside in share markets,” he said.
After an overnight kick, the dollar remained firm, helped by missing forecasts of Australian wage growth, which pulled the Australian dollar below $0.70.
The greenback held steady on the euro at $1.0534 and halted a strong bounce for sterling at $1.2480, following solid labour data on Tuesday. Later on Wednesday, inflation data in Britain and Canada could also turn expectations of rates and move currencies. The dollar index stood at 103.370.
“It’s still far too early to call a long term peak in the dollar, and retracements should be shallow,” said analysts at Westpac. “But some two-way consolidation between 102-104 is likely near-term,” they added, referring to the dollar index.