Asian markets rise on hopeful outlook but eyes on inflation
HONG KONG – Asian markets edged up as investors remained bullish on the outlook for the global economy as the dollar extended its gains at the end of a week that saw inflation in the United States and in China reach heights not seen in decades.
A respite from the crisis surrounding ailing Chinese developer Evergrande, and reports that Beijing was planning to ease financial rules on the real estate sector, has also provided much-needed support to the region.
Wall Street offered a largely bullish lead after two days of losses fueled by fears that a price hike to exceed expectations last month would force the Federal Reserve to end its massive buying stimulus program earlier than expected. ‘bonds and raise interest rates sooner.
However, analysts said dealers were hopeful that the inflation surge would not last long and smooth out as supply chains normalize and jobs increase, and that the Fed would likely not change his plans to slow down the withdrawal of political support.
Meanwhile, a better-than-expected earnings season – which occurred despite rising prices and problems accessing supplies – gave traders confidence that the recovery was still on track.
“Inflation could remain elevated in the coming months, and every inflation release that exceeds expectations has the potential to cause volatility in the fixed income and equity markets, but we still don’t expect that to happen. ‘inflation is derailing the equity rally, “UBS’s Mark Haefele told Global Wealth Management.
Nonetheless, the prospect of higher rates has boosted the dollar, which is around a four-year high against the yen, as it also benefits from strong appreciation against the pound and the euro.
In stock markets, Tokyo advanced as exporters were boosted by the weaker yen, while Sydney and Seoul were also up more than 1%. Gains were also recorded in Shanghai, Singapore, Taipei and Manila, although Wellington and Jakarta struggled.
Hong Kong extended Thursday’s advances, helped by a rally in tech companies, which suffered a scorching year as China clamped down on the industry.
Investors in the city were also boosted by news Thursday that China Evergrande had met its bond payment obligations by a deadline, averting a default and giving it some breathing space as it struggled under a mountain of debt.
Evergrande is one of a number of Chinese developers caught up in a regulatory crackdown on real estate speculation and leverage.
But authorities now appear to be rescinding some rules, with state media suggesting measures to help developers tap into debt markets and give them access to much-needed liquidity.
Key figures around 02:30 GMT
Tokyo – Nikkei 225: UP 1.1% to 29,612.21 (pause)
Hong Kong – Hang Seng Index: EN up 0.5% to 25,380.68
Shanghai – Composite: EN up 0.1% to 3,535.46
Dollar / yen: UP at 114.25 yen vs. 114.08 yen at 9:15 p.m. GMT
Euro / dollar: DOWN to $ 1.1437 from $ 1.1449
Pound / dollar: DOWN to $ 1.3354 from $ 1.3365
Euro / pound: DROP to 85.64 pence against 85.66 pence
West Texas Intermediate: DOWN 0.3% to $ 81.33 per barrel
Brent North Sea: DOWN 0.3% to $ 82.62 per barrel
New York – Dow: DOWN 0.4% to 35,921.23 (close)
London – FTSE 100: Up 0.6% to 7,384.18 (close)
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