Most markets are up in Asia, with central bank meetings at the center of concerns
The Federal Reserve’s policy meeting this week will be closely watched as it prepares to scale back its bond buying program, while traders will also look for clues to its interest rate plans – Copyright AFP Daniel SLIM
Asian markets mostly rose on Tuesday as traders bided their time before major central bank meetings this week, which are expected to see officials begin to withdraw broad financial support from the pandemic era, while keeping an eye out keen on inflation and supply chain grunts.
Another record-breaking Wall Street close provided a successful lead thanks to a strong earnings season that saw the vast majority of companies exceed expectations despite concerns over the impact of soaring input costs and Covid infections on the third trimester.
Hong Kong was among the top performers early on Tuesday, helped by a surge in tech companies, which were profiting from good deals after a scorching year that saw China tighten its grip on the industry.
Real estate giant China Evergrande’s payment of interest on a second bond past due before the weekend deadline gave an additional boost and slightly eased fears of an impending collapse.
The Hang Seng Index climbed more than 1.5%, as did Seoul, while there was also progress in Shanghai, Singapore, Taipei, Manila and Jakarta.
Tokyo plunged after climbing more than 2% on Monday, with Sydney and Wellington also down slightly.
And, although there are concerns about slowing global growth, analysts remain optimistic about the outlook for the markets.
“We are now in the middle of an early ‘January effect’ and I expect that to continue until Thanksgiving,” said markets strategist Louis Navellier.
“However, December is also a strong seasonal month and January is generally stronger, so we have three months of seasonal strength to look forward to.
“In the meantime, we’re still in the midst of wave after wave of better-than-expected third quarter earnings announcements, so take advantage of that.”
Attention now turns to central bank policy meetings, with officials from the United States, Britain and Australia among those making the decisions this week.
While several countries are already starting to raise interest rates, traders are now bracing for the end of the era of cheap cash, which has helped propel markets to all-time highs or multi-year highs.
While the Bank of England and the Reserve Bank of Australia will be closely watched, the Federal Reserve rally is the main focus of attention. U.S. officials are expected to start scaling back their bond buying program this month, but observers have said the board’s timeline for increasing borrowing costs will be a priority.
The main focus of the meeting “will be much more on the Fed’s position on inflation than on tapering,” said Steve Englander of Standard Chartered Bank.
“The elephant in the room is the headline and core inflation, which is higher than what (the Fed’s board of directors) expected.”
The release of US employment figures on Friday will also be followed for new insight into the impact of inflation and Covid infections on the labor market.
– Key figures around 02:30 GMT –
Tokyo – Nikkei 225: DOWN 0.2% to 29,580.49 (pause)
Hong Kong – Hang Seng Index: + 1.7% to 25,571.05
Shanghai – Composite: EN up 0.3% to 3,554.34
Dollar / yen: LOWER to 113.96 from 114.00 yen at 2020 GMT
Pound / dollar: DOWN to $ 1.3652 from $ 1.3658
Euro / dollar: DOWN to $ 1.1597 from $ 1.1604
Euro / pound: DROP to 84.93 pence against 84.96 pence
West Texas Mid: Up 0.2% to $ 84.24
North Sea Brent: Up 0.3% to $ 84.97 per barrel
New York – Dow: 0.3% at 35,913.84 (close)
London – FTSE 100: Up 0.7% to 7,288.62 (close)