Asia stocks up as battered investors find some positives

Singapore — Asian equities rose on Friday as investors looked to end the year on an optimistic note after US data showed the Federal Reserve’s aggressive monetary policy was dampening inflationary pressures, even as worries over Covid cases in China persist.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.71% and was set to end December flat. The index appears likely to end the year down 19% — its worst performance since 2008.

Japan’s Nikkei rose 0.22%, while Australia’s S&P/ASX 200 index rose 0.34%. China stocks were 0.63% higher, while Hong Kong’s Hang Seng index rose 1.5%.

US stocks closed sharply higher overnight, buoyed by data showing rising US jobless claims that suggested the Federal Reserve’s interest rate hikes are reducing inflationary pressures.

Investors have been worried that central banks’ efforts to tame inflation could lead to an economic slowdown, while the uncertainty over how swiftly China’s economy will recover in the wake of removal of Covid controls have kept markets subdued.

“Averting a downturn is a tall order,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank, noting that the odds are stacked against economies emerging unscathed from global policy tightening.

Going into 2023, inflation has still to be beaten, and investors will also be wary of geopolitical tensions arising from Russia’s war in Ukraine and diplomatic strains over Taiwan, analysts said.