Asian markets see minor shifts with traders’ eyes on the Fed again

Trading overshadowed by concerns over what Washington will do if its post-pandemic recovery heats up its economy a little too much

Stock markets across Asia inched ahead on Tuesday following a record-breaking day on Wall Street but traders remained cautious ahead of the Federal Reserve’s next policy meeting later this week.

With coronavirus vaccines rolling out and businesses reopening in many countries, investors were broadly upbeat about the global economic outlook while fears have eased that an expected inflation spike will force central banks to taper their ultra-loose monetary policies.

The release of data last week showing US consumer prices had jumped far more than forecast did not have the impact it was feared with the Fed insisting spikes were to be expected owing to last year’s low base of comparison and supply bottlenecks.

Also on AF: Big-name banks pushing hard to tap China’s growing wealth

Tokyo ended up 1%, while Wellington added a little more with gains also seen in Sydney, Seoul, Singapore, Taipei, Manila and Mumbai.

Hong Kong fell, however, as investors returned from a long weekend, with eyes on a nuclear plant across the border in China following a US report of a potential leak.

The Chinese central bank’s decision to drain liquidity from financial markets hit buying demand from investors north of the border. Shanghai, Bangkok and Jakarta also slipped.

The S&P 500 and Nasdaq both clocked record highs on Monday.
But trading floors remained nervous places as governments in parts of the world are still battling to overcome the virus and more transmissible variants, which are either forcing them to delay reopenings or reimpose fresh containment measures.

BITCOIN HEDGE

Bitcoin held above $40,000 after Elon Musk said at the weekend that Tesla would start accepting the unit again once it is mined more ecologically, while it also got a boost from top hedge fund manager Paul Tudor Jones, who endorsed it as a good hedge against inflation.

However, Marc Odo of Swan Global Investments said: “These days, bitcoin’s market pivots on what Elon Musk tweets – for me, that’s not a great indicator.

“I don’t think there’s anything fundamentally moving bitcoin one way or the other, other than rumours and tweets. That’s not an asset class I want to be involved with.”

Oil prices rose as demand optimism overshadowed virus infection concerns, with both contracts around multi-year highs and the gains are seen as likely to continue.

MARKETS
Tokyo – Nikkei 225: UP 1.0% at 29,441.30 (close)
Hong Kong – Hang Seng Index: DOWN 0.7% at 28,638.53 (close)
Shanghai – Composite: DOWN 0.9% at 3,556.56 (close)
New York – Dow: DOWN 0.3% at 34,393.75 (close)