AU Stocks Higher Despite Asian Stocks Uncertain

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Asia-Pacific markets were trading mixed last Thursday, caused by fears of the potential slowing down of Chinese economic growth and tension with the US. However, Australian stocks are seeing improvements and are hopeful its central bank will ease inflation.

The Chinese indexes are feeling pressure from fears of slower economic growth and deteriorating relationships with the US. 

“China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell about 0.2 per cent each, having lagged their regional peers this week as markets feared a further deterioration in diplomatic ties between the world’s largest economies. China threatened retaliation if Taiwan President Tsai Ing-wen met US House Speaker Kevin McCarthy during an American visit this week,” noted financial journalist Ambar Warrick.

The journalist also added that China would continue to boost domestic spending and promised more stimulus to help limit its stock losses. With the recent events, Hong Kong’s Hang Seng index fell 0.5 per cent, Japan’s Nikkei 225 dropped 0.8 per cent, and the Malaysian and Thai stocks fell 0.2 per cent each.

However, Australian stocks outperformed the other Asia-Pacific stocks, growing 0.9 per cent. This was due to the growing expectations that the Reserve Bank of Australia (RBA) may hit the pause button on its rate hike cycle earlier than expected.

According to Marcel Thieliant, a senior economist at Capital Economics, “the further sharp fall in inflation coupled with the softness of consumption will probably prompt the RBA to pause it’s tightening cycle next week.”

The recent statement of RBA Governor Philip Lowe may support Thieliant’s prediction. Lowe said that RBA might be pausing the rate increases because the monetary policy is in its restrictive territory and may come as soon as April, depending on data.

Lithium stocks also helped with the increased performance of the ASX, with Liontown Resources adding 0.8 per cent to $2.59 a share. Allkem also rose 3.5 per cent, while Pilbara minerals at 2.3 per cent.

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