Asian stocks rise but bank fears, Fed uncertainty limit gains

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Investing.com — Most Asian stocks rose on Tuesday as regulatory measures to stabilize the banking sector helped somewhat reassure investors, although fears of a potential worsening in conditions and uncertainty before a Federal Reserve meeting kept gains limited.

Regional markets were still nursing steep losses over the prior week, amid fears of a U.S. and European bank crisis. Trading volumes were also limited for the day on account of a Japanese market holiday.

Sentiment somewhat improved as U.S. regulators rolled out more liquidity measures to protect bank deposits, and as European regulators brokered a merger between UBS Group (SIX:UBSG) and beleaguered lender Credit Suisse Group (SIX:CSGN).

Bank-heavy bourses saw the biggest rises for the day, with Australia’s ASX 200 index up 1.1% on strong gains in the country’s big four banks. But the benchmark index was still down over 2% in the past week.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes added 0.4% and 0.2%, respectively, while Philippine stocks led gains across risk-heavy Southeast Asian markets with a 0.8% bounce.

Technology-heavy indexes were cautiously higher, with the Taiwan Weighted index up 0.5%, while Hong Kong’s Hang Seng index added 0.4%.

India’s Nifty 50 and BSE Sensex 30 indexes rose about 0.3% and 0.4%, respectively, in early trade.

Sentiment remained on edge ahead of a pivotal Federal Reserve decision on Wednesday, where the central bank is widely expected to hike rates by 25 basis points. But the bank’s stance on future monetary policy will be closely watched, with markets betting that the Fed will soften its hawkish stance to prevent more pressure on the banking sector.

Still, markets remain uncertain over the path of monetary policy, given that U.S. inflation is trending well above the Fed’s target range.

While U.S. regulators acted quickly to prevent a broader banking collapse, concerns also remained about smaller lenders in the country with large uninsured deposits. Shares of First Republic Bank (NYSE:FRC) were dumped to record lows on Monday following this notion.

Still, a positive overnight session on Wall Street provided similar cues to Asian markets for the day. Wall Street indexes were supported by a recovery in bank stocks.