Asian markets: Asian markets struggle to keep up with Wall St rally, eyes on US jobs
Equities around the world saw good progress on Thursday after the Federal Reserve finally announced its plan to cut the massive bond-buying program that has provided crucial support since its inception at the start of the pandemic.
The news has raised much uncertainty about the authorities’ response to a spike in inflation that is expected to last much longer than previously thought, and follows steps in other countries to step back by compared to their super-easy measures as the global economy recovers.
However, the Bank of England’s decision on Thursday not to hike rates shocked traders, who had recently taken indications from boss Andrew Bailey that it would.
While its board has signaled that a hike is still on the agenda in the coming months, it has raised questions about how quickly financial executives will tighten policy, forecasts regarding the own timeline. of the Fed’s hike being postponed.
Bond yields, which point to future interest rate prices, fell after the announcement and raised concerns about further uncertainty, especially as inflation remains stubbornly high due to chain growls. supply, high commodity prices and wage growth. This has fueled discussions about a period of stagflation when prices rise but economic growth stagnates.
“Rates are a global market,” said Subadra Rajappa of Societe Generale. “Global central banks appear to be pushing back market expectations for aggressive political action.”
The BoE’s move also hammered the pound, which sank against the dollar, and it struggled to recover below $ 1.35 on Friday, having previously been at $ 1.37.
Yet Wall Street saw another record, with tech companies the biggest beneficiaries as they are more sensitive to higher borrowing costs.
The S&P 500 and Nasdaq both hit new highs for a fifth day in a row, although the Dow Jones fell. The Paris and Frankfurt markets have also reached new heights.
However, Asian investors have struggled to pick up the slack. Tokyo, Shanghai, Hong Kong and Seoul all fell, while there were gains in Sydney, Singapore, Wellington, Taipei and Jakarta. Manila jumped more than one percent as anti-virus measures were relaxed in the Philippine capital.
Oil has skyrocketed after OPEC and other major producers stuck to their plan to modestly increase production despite rising demand and supply concerns.
The move also ignored a call from US President Joe Biden and other major energy-consuming countries to turn on the taps more.
Friday’s gains came after a recent sharp drop in prices following news that Iran’s nuclear talks were progressing and could lead to the lifting of sanctions banning the sale of Tehran crude on world markets.
Still, OANDA’s Edward Moya expects the commodity to remain buoyant.
“The sale of WTI crude will not last long as the oil market is still in deficit and whatever the US response is likely to be temporary relief and nothing that will bring US production back to levels seen under the Trump administration.” , he wrote in a note.
“The mid-1970s should prove to be a very attractive start for energy traders.”
Key figures around 03:00 GMT – Tokyo – Nikkei 225: DOWN 0.7% to 25,593.61
Hong Kong – Hang Seng Index: DOWN 0.8% to 25,020.03
Shanghai – Composite: DECREASE 0.1% to 3,523.55
Pound / dollar: DOWN to $ 1.3486 from $ 1.3496 at 9:15 p.m. GMT
Dollar / yen: LOW 113.70 yen from 113.73 yen
Euro dollar: LOW at $ 1.1542 from $ 1.1551
Euro / pound: up to 85.59 pence from 85.58 pence
West Texas Intermediate: Up 1.1% to $ 79.66 per barrel
Brent North Sea crude: Up 0.9% to $ 81.23 per barrel
New York – Dow: DOWN 0.1% to 36,124.23 (closing)
London – FTSE 100: UP 0.4% at 7,279.91 (closing)