China rises on the purchase of sovereign funds as Asian markets decline due to concerns about interest rates

As investors priced in early U.S. interest rate reduction and anticipated signals from many regional central banks, the majority of Asian equities declined on Tuesday. However, Chinese markets rose following rumours that a state fund had pledged to increase its purchases.

Strong economic statistics and hawkish remarks from Federal Reserve Chair Jerome Powell led to growing confidence that the central bank will maintain higher interest rates for an extended period of time, which caused Asian markets to follow Wall Street's lead.

Hong Kong's Hang Seng index increased 1.9% due to gains in mainland equities.

The news that sovereign fund Central Huijin Investment will keep acquiring exchange-traded funds and supporting regional stock markets served as a major catalyst for investors seeking Chinese stocks.

It is yet unclear whether Tuesday's actions would lead to a long-term rebound in Chinese markets, considering that state-backed funds have been persistently trying to prevent an ongoing sell-off of regional equities.

The fundamental causes of the stock market meltdown in China—concerns about the country's economy growing more slowly—were still relevant. January's inflation report, which is anticipated later this week, is predicted to show little improvement, particularly in light of a run of unimpressive purchasing managers index readings for the month.

Regarding the UK, Eurozone and the US, the economic calendar is rather quiet today with the main event being the construction PMI for the UK. Due at 9:30 GMT.

Companies reporting earnings today: Eli Lilly, Amgen, UBS, Chipotle, Spotify

(Sources: investing.com, reuters.com)