Asian markets largely charged ahead on Tuesday following in the wake of another record day on Wall Street and thanks to fears easing over the likely economic impact of the Omicron variant.
While the new Covid variant is spreading fast around the world, the indications are its impact will be far less severe than initially feared, fuelling hopes that life can return to normality sooner rather than later.
However, inflation, supply chain snags, central bank policy tightening and geopolitical woes continue to weigh on sentiment and analysts have warned that the blockbuster gains seen in recent years could be tougher to attain.
“We expect 2022 to be far more challenging from an investment perspective,” Heather Wald, of Bel Air Investment Advisors, noted. “Rarely has a market delivered three consecutive years of double-digit returns, as we have seen from 2019-2021.”
Still, she expected “equities to remain attractive versus other liquid asset classes.”
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The Dow and S&P 500 started the new year in the same fashion as they spent most of 2021, by notching up new all-time highs, while the Nasdaq also rallied thanks to a surge in big-name stars including Apple, which briefly became the first firm valued at $3 trillion, and Tesla.
Most of Asia followed suit and Sydney piled on 2% while Tokyo was up almost as much, with Singapore and Taipei also up more than 1%.
The Nikkei 225 rose 1.77%, or 510.08 points, to end at 29,301.79, while the broader Topix index added 1.90%, or 37.89 points, to 2,030.22.
There were also gains in Hong Kong, Mumbai, Bangkok and Jakarta, while Shanghai dipped and Seoul was flat.
The Hang Seng Index edged up 0.06%, or 15.09 points, to 23,289.84. The Shanghai Composite Index dipped 0.20%, or 7.45 points, to 3,632.33, while the Shenzhen Composite Index on China’s second exchange lost 0.10%, or 2.44 points, to 2,527.70.
London opened more than 1% higher at the start of its first day of the year, while Paris and Frankfurt also rose.
Trading in Manila was cancelled when a system glitch struck less than an hour after the start.
Evergrande Shares Rise
Shares in embattled Chinese property giant Evergrande rose in Hong Kong after a day-long suspension, as the company confirmed it had been ordered to demolish part of a resort in Hainan province.
Investors will keep a close eye on the release of minutes from the Federal Reserve’s December policy meeting hoping for some insight into its plans this year in light of surging inflation, which is forcing central banks around the world to wind back their pandemic stimulus.
The Fed has already started tapering its bond-buying programme and the focus is now on what it will do with interest rates, with some commentators predicting three hikes before 2023.
Anticipation that rates will rise lifted the yield on the 10-year US Treasury note above 1.6% on Monday, though analysts said that could also reflect an upbeat view on the economic outlook.
Bets on US borrowing costs rising this year and expectations Japan’s central bank will stick to its ultra-low rate have pushed the dollar to levels not seen since late 2017.
Key figures around 0820 GMT –
Tokyo > Nikkei 225: UP 1.8% at 29,301.79 (close)
Hong Kong > Hang Seng Index: UP 0.1% at 23,289.84 (close)
Shanghai > Composite: DOWN 0.2% at 3,632.33 (close)
London > FTSE 100: UP 1.1% at 7,463.49
New York > DOW: UP 0.7 percent at 36,585.06 (close)
- AFP with additional editing by Sean O’Meara
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