Most Asian markets follow Wall St higher, but traders stay on edge
Hong Kong (AFP)
Asian markets mostly rose on Thursday after the previous day’s pullback, although investors continue to fear that soaring inflation could lead to interest rate hikes, while the debt standoff in Washington and the prospect of a historic US default also pissed off nerves.
The Dow Jones and S&P 500 provided a positive lead, although the unconvincing end of the trading day on Wall Street indicated lingering uncertainty in the trading rooms.
Although expected for most of the year, the prospect that the Federal Reserve and other major central banks will soon begin to remove the ultra-accommodative monetary policies they put in place at the start of the pandemic has cooled the feeling in recent weeks.
The planned measures come as officials seek to bring inflation under control, which has skyrocketed this year thanks to economic reopenings but has been more persistent than many expected due to supply chain issues.
Concerns that banks will have to tighten policy faster and sooner than expected come as the global economic recovery shows signs of slowing, with an increase in Covid infections weighing on consumer sentiment.
“Growth has clearly hit an air pocket here with concerns about Covid, with the drama currently unfolding in Washington, the Chinese real estate sector that has rocked global markets,” Christopher Smart, at Barings, told Bloomberg TV.
“That said, the overall trajectory of the global economy remains roughly where it was earlier this year.”
Data showed that Chinese factory activity contracted in September for the first time since February 2020 as the country faces an energy crisis that has resulted in blackouts.
Although there have been few major reactions, analysts have warned that the issue remains a source of global concern as it could exacerbate the supply chain crisis and add to inflationary pressures.
– The impasse on the American debt –
Still, Fed boss Jerome Powell told other central bank chiefs on Wednesday that the inflation problem would eventually ease.
“The current spike in inflation is really a consequence of supply constraints responding to very strong demand, and all of this is associated with the reopening of the economy – which is a process that will have a beginning, a middle and an end. “, he told a virtual panel comprising the bosses of the European Central Bank, the Bank of Japan and the Bank of England.
“It’s very hard to say how big the effects will be in the meantime, or how long they’ll last, but we expect us to come back, we’ll be fine.”
At the start of Asian trade, Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei, Manila and Jakarta all increased.
But Hong Kong slipped after a three-day gain and Tokyo retreated after a recent rally to three-decade highs.
Traders also face a slew of other issues, including China’s crackdown on private industries, the potential collapse of its real estate colossus Evergrande, and the US debt ceiling haggling.
Republicans have blocked Democratic measures to lift the borrowing limit, and with Treasury Secretary Janet Yellen warning the government will run out of cash to meet its obligations on October 18, the race is on to avoid what many say could be a catastrophic fault.
Observers say that while the dispute is only a political matter, the fact that the deadline was so close was making waves in the trading rooms.
The row comes as Democrats also struggle to push through President Joe Biden’s multibillion-dollar infrastructure and social spending bills.
– Key figures around 02:30 GMT –
Tokyo – Nikkei 225: DOWN 0.4% to 29,439.37 (pause)
Hong Kong – Hang Seng Index: DOWN 0.8% to 24,466.65
Shanghai – Composite: + 0.5% to 3,553.80
Dollar / yen: LOWER to 111.83 yen from 111.98 yen at 9:00 p.m. GMT
Euro / dollar: up $ 1.1609 from $ 1.1604
Pound / dollar: up $ 1.3452 from $ 1.3419
Euro / pound: DROP to 86.29 pence against 86.38 pence
West Texas Intermediate: DOWN 0.2% to $ 74.69 per barrel
North Sea Brent: DOWN 0.3% to 78.40 dollars a barrel
New York – Dow: UP 0.3% to 34,390.72 (close)
London – FTSE 100: Up 1.1% to 7,108.16 (close)
© 2021 AFP