Asia Markets Rally on False Recovery Signal, Analysts Warn
The Asia-Pacific stock markets have been rallying lately, but experts are cautioning that this rebound may not be a true recovery. According to Asia Plus Securities, investors face continued risks from global interest rates and weaker-than-expected US growth.
Historical trading patterns suggest that markets often recover during the day before facing late-session selling pressure, occurring in 6 out of 8 trading days at the end of July. This pattern indicates a shift from 'buying the dip' toward a distribution phase, where investors may be taking profits rather than building new positions.
The US economic data has also raised concerns, with second-quarter GDP growth coming in at 1.5%, below market expectations of 2.0%. The Personal Consumption Expenditures (PCE) price index remained stable, easing inflation concerns, but investors are closely watching upcoming manufacturing and employment data.
The US Federal Reserve's more hawkish stance has pressured markets, with Fed Watch expectations pointing to a possible rate increase later this year. This has pushed US 30-year Treasury yields up to 5.20% and weighed on equities.