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Asian markets edge higher but inflation, virus fears cast shadow
HONG KONG, March 25, 2021 (BSS/AFP) – Asian markets rose Thursday but
optimism over the pace of economic recovery continued to be offset by worries
about rising infections across Europe and the continent’s vaccine struggles,
with inflation concerns casting an ever-present shadow.
After a year-long surge, global equities have run out of steam with
expectations of a strong growth rebound stoking fear that prices will soar,
forcing central banks to wind in the ultra-low monetary policies that have
supported the rally.
And while the stock gains have been boosted by the rollout of inoculations
— particularly in Britain and the United States — Europe’s stuttering
launch has been compounded by a jump in new cases that has led to lockdowns
and containment measures being reimposed.
That has many observers questioning whether its economy can recover as
quickly as previously hoped.
US markets sank again Wednesday, led by a two percent drop in the Nasdaq
as technology firms took a further hit from expectations the Federal Reserve
will have to lift interest rates earlier than forecast, despite repeated
pledges by policymakers that they will not budge.
Adding to the selling in New York were fears Joe Biden will look to hike
corporate taxes to pay for his huge economic rescue packages, while a
fractious meeting between US and Chinese officials last week indicating
relations will not likely improve any time soon.
“When the short term wobbles, investors naturally start to fret about
those lingering longer-term concerns,” said Axi strategist Stephen Innes.
“They are also hurting sentiment with renewed worries about US tax policy
and a realisation that any lingering hope of a reset in US-China trade
relations is unwarranted.
“The latter is quite a worrying proposition as the two economic behemoths
draw battlegrounds, setting the stage for a real dust-up as the superpowers
shift from vying for supply-chain domination to battling it out for global
internet technology supremacy.”
– ‘Oil on the water’ –
Still, Asian investors pushed tentative gains in early trade Thursday
following recent losses.
Tokyo, Shanghai, Seoul and Sydney were all up healthily, while there were
also advances in Singapore, Taipei and Manila.
Hong Kong edged up but investors were keeping a worried eye on the city’s
already slow vaccine programme after Pfizer/BioNTech shots were halted
Wednesday following the discovery of some flawed packaging.
However, tech firms in the city followed their US peers lower and the Hang
Seng Index remains in correction territory having fallen 10 percent from its
recent high seen in February.
“The reflation trade will have further legs to run,” Lale Akoner, at BNY
Mellon Investment Management, told Bloomberg TV. But she added: “We do see
higher inflationary pressures building, higher interest rates and softer
dollar to continue.”
Oil prices sank more than one percent a day after soaring seven percent in
reaction to a giant container ship getting stuck in the Suez Canal, one of
the world’s busiest shipping routes.
Crude, which tipped a 14-month high earlier this month, has suffered heavy
selling in the past couple of weeks on fears about the impact on demand
caused by new European lockdowns.
Innes added the Suez blockage “means increased oil on the water — either
queuing for the canal or diverting around Africa. The extra voyage time is
akin to ‘filling a pipeline’ and should support the very jittery market that
has seen the rush for the door over the past five sessions”.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 1.1 percent at 28,709.27 (break)
Hong Kong – Hang Seng: UP 0.1 percent at 27,934.89
Shanghai – Composite: UP 0.3 percent at 3,375.70
Euro/dollar: UP at $1.1821 from $1.1812 at 2040 GMT
Pound/dollar: UP at $1.3703 from $1.3681
Euro/pound: DOWN at 86.27 pence from 86.32 pence
Dollar/yen: UP at 108.95 yen from 108.71 yen
West Texas Intermediate: DOWN 1.5 percent at $60.25 per barrel
Brent North Sea crude: DOWN 1.3 percent at $63.57 per barrel
New York – Dow: FLAT at 32,420.06 (close)
London – FTSE 100: UP 0.2 percent at 6,712.89 (close)
BSS/AFP/FI/ 0920 hrs