• Dow and S&P 500 record all-time highs while Hang Seng fizzles
• Bitcoin hovering around $44,000 after surging more than 20% over weekend
Most of Asia’s markets saw an upturn in value on Monday but investors remained cautious as a forecast-beating US jobs report reinforced optimism about the economic recovery – but also fanned speculation the Federal Reserve could begin tapering monetary policy this year.
Spiking infections around the world from the Delta coronavirus variant are also jangling the nerves and hammering oil prices as governments reassess their growth outlooks with some – including China – forced to reimpose lockdowns and other containment measures.
Data from the United States on Friday showed the world’s biggest economy created 943,000 new jobs in July, while the June reading was also revised up to more than 900,000.
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The news provided some much-needed reassurance that the rebound was still on track despite Delta’s spread.
However, it also renewed concerns that in a bid to prevent overheating, the Fed will start to wind down the ultra-loose policies – including record-low interest rates and a vast bond-buying scheme – that have been integral to an equity market rally since April last year.
The bank has continuously stressed that it will maintain its accommodative stance for as long as the economy needs to recover but with inflation at multi-year highs and jobs returning, it is coming under increasing pressure to act.
“You have these concerns that if the economy is growing very, very strongly then that might bring forward the tightening or the tapering by the Fed,” Shane Oliver, at AMP Capital, said.
TOKYO CLOSED
“There is a good chance they might announce that tapering in September and it would start later this year.”
Still, US investors were broadly upbeat, with the Dow and S&P 500 ending at all-time highs, though the Nasdaq slipped with tech firms more sensitive to higher rates.
And Asian investors mostly took up the baton, though early rallies fizzled. Hong Kong, Shanghai, Manila, Mumbai, Kuala Lumpur and Bangkok rose but Seoul, Wellington, Taipei and Jakarta slipped while Sydney was flat. Tokyo and Singapore were closed for holidays.
GOLD WEIGHED
The Hang Seng Index closed 0.4%, or 104.00 points, up at 26,283.40. The Shanghai Composite Index jumped 1.05%, or 36.41 points, to 3,494.63, while the Shenzhen Composite Index on China’s second exchange rose 0.81%, or 19.78 points, to 2,462.84.
The prospect of higher rates down the line was also weighing on gold, which fell more than 1% as investors were attracted by the possibility of better returns elsewhere.
There was little reaction to data showing growth in Chinese exports slowed last month, while inflation came in slightly above expectations.
OIL TUMBLES
However, oil prices tumbled as the fast spread of Delta raised concerns about the outlook for demand, particularly in China. Both main contracts were down more than 3%, having lost more than 2% Friday.
Investors are also keeping tabs on developments in Washington, where lawmakers are close to a vote on President Joe Biden’s $1.2 trillion infrastructure bill, which will provide another massive shot in the arm to the economy.
Bitcoin was hovering around $44,000 after surging more than 20% to more than $45,000 between Friday and Sunday, as cryptocurrencies enjoyed a recovery after weeks of being buffeted by Chinese moves to crack down on the sector.
MARKETS
Hong Kong – Hang Seng Index: UP 0.4% at 26,283.40 (close)
Shanghai – Composite: UP 1.1% at 3,494.63 (close)
Tokyo – Nikkei 225: Closed for a holiday
New York – Dow: UP 0.4% at 35,208.51 (close)
- AFP and Sean O’Meara
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