Updated April 22nd, 2024 at 13:48 IST

Asian stocks advance amid easing Middle East tensions

MSCI's broadest index of Asia-Pacific shares rebounded by 0.93% recovering from a 4.5% decline the previous week fuelled by escalating tensions in Middle East.

Reported by: Business Desk
Analysts at Barclays anticipate a rate cut by the Bank Indonesia in the first quarter of 2025. | Image:Unsplash
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Emerging Asian equities saw gains on Monday as concerns over a broader conflict in the Middle East diminished, prompting investors to turn to riskier assets. However, currency markets displayed a mixed performance, with the dollar maintaining its strength.

The MSCI's broadest index of Asia-Pacific shares rebounded by 0.93 per cent on Monday, recovering from a 4.5 per cent decline the previous week fuelled by escalating tensions in the Middle East following Israel's retaliatory strike on Iran.

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Singaporean stocks rose by as much as 2 per cent, while Malaysian shares added up to 0.8 per cent. South Korean shares also saw an uptick of up to 1.5 per cent. In contrast, Indonesian shares slipped by 0.9 per cent to their lowest level since December 2021.

Monday marks the anticipated verdict on two challenges to the outcome of Indonesia's February presidential election. The losing candidate has alleged state interference in favour of the winner, Prabowo Subianto.

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Currency movements across the region varied as the US dollar retained its strength. Last week's comments from Federal Reserve officials and higher-than-expected inflation data led to a recalibration of rate cut expectations in the US and other developed economies.

The Thai baht weakened by up to 0.5 per cent to its lowest level since October 2023, while the Taiwanese dollar fell by 0.4 per cent to its lowest level since 2016. Conversely, the Malaysian ringgit and the Philippine peso remained largely unchanged, while the Indonesian rupiah gained 0.2 per cent following bolder interventions by Indonesia's central bank.

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Analysts at Barclays anticipate a rate cut by the Bank Indonesia in the first quarter of 2025. However, they expect a rate hike in April, potentially exceeding 25 basis points, to signal the bank's stance rather than significantly impacting the rupiah.

Data from Seoul revealed an 11.1 per cent increase in exports for the first 20 days of April compared to the same period last year, while Taiwan is set to report March export orders later in the day.

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Additionally, the Vietnamese dong remained largely unchanged, hovering near its lowest level on record reached during the previous week.

(With Reuters inputs)
 

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Published April 22nd, 2024 at 13:48 IST