As worries about the banking sector diminish, Asian stocks rise

The Topix index, an Asian stock gauge, ended a two-day losing streak with gains in Hong Kong, Australia, and Japan, bringing it to its highest point in over two weeks.As fears abated in the banking and stock markets, investors gradually warmed up to the idea of taking on more risk. On Monday, the financial sector led the way on Wall Street, while the energy sector also saw gains. After a two-week upswing, the tech-heavy Nasdaq 100 index closed the day down 0.7%.The yield on two-year Treasuries, which had risen by 23 basis points on Monday, fell back below the 4% level in Asian trading Tuesday. Rates on government debt rose in Australia and New Zealand trading as a result of sentiment carried over from the US session.For the second day in a row, a measure of the dollar's strength inched lower, while the yen gained ground.However, market participants are still worried that the Federal Reserve will be forced to implement higher rate hikes for a longer period of time in order to control inflation. A recession later this year becomes more likely under such circumstances.In the next meeting, swaps traders have priced in a 50% chance of a rate hike by the Federal Reserve of a quarter point. After that, they anticipate a sizable cut in rates, with the policy rate expected to fall from 4.9% in May to 4.2% in December.On Bloomberg Radio, Cheryl Smith, portfolio manager at Trillium Asset Management, predicted that the Fed would raise interest rates by another 25 or 50 basis points before holding them steady through the end of the year. “They'll keep those interest rates high because it's the only tool they know will slow down an economy and lead to lower inflation,” the author writes.Nevertheless, US stocks, led by the S&P 500, have been on the rise for the past two weeks.According to JPMorgan's chief strategist Marko Kolanovic, who urged investors to be cautious in a research note, the first quarter “will likely mark the high point for equities this year.”According to Kolanovic's analysis, “the most exposed sectors are loss-making businesses that rely on a constant infusion of equity capital to fund operations and tight carry trades implemented over the last 10 to 20 years.”Michael Wilson, a strategist at Morgan Stanley and one of Wall Street's most prominent bears, shared this pessimism, arguing that earnings estimates and valuations need to fall.Some digital currency-related shares in Asia fell after the US Commodity Futures Trading Commission sued Binance Holdings for alleged violations of trading and derivatives rules.After posting its largest daily rally since October on Monday, when it gained about 5%, oil prices continued to rise in early Asian trading on Tuesday. Gold hardly shifted at all.