HONG KONG: Asian risk markets recovered from lows and bonds stabilised on relief that policy normalisation was still some way off but China’s pledge to rein in the recent spike in commodity prices sparked fears of tightening.
China’s market under-performed after a State Council executive meeting chaired by Premier Li Keqiang was followed by a statement which said Beijing will work to ensure the supply of commodities and keep their prices stable.
“While the market continues to play a decisive role in resources allocation to ensure the supply of commodities and keep their prices stable, the government must better fulfil its responsibility. Any monopoly and hoarding will be cracked down upon under the law to step up market regulation,” Premier Li said in the statement.
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Japan’s Nikkei 225 index rose 0.78%, Australia’s S&P ASX 200 edged up 0.15% but Hong Kong’s Hang Seng index ended flat and China’s CSI300 eased 1.01% after concerns over Beijing’s pledge to keep commodity prices in check. Regionally, the MSCI Asia Pacific index climbed 0.48%.
US Treasuries were steady with the 10-year yield unchanged at 1.65% after weaker-than-expected US business activity reading. A decline in commodity prices, particularly oil, also undermined the thesis for too-hot inflation.
While the concerns over price pressures were in check, analysts are warning against complacency.
“We believe the April inflation surge largely reflects a temporary imbalance which will correct as shortages and supply chain issues abate,” said BofA Securities analysts Olivia Lima, Meghan Swiber, and Mark Cabana.
‘INFLATION EXPECTATIONS’
“That said, there are risks transitory can become permanent via higher inflation expectations.”
Oil prices recovered slightly after steep drops on Thursday, when diplomats said progress was made toward a deal to lift U.S. sanctions on Iran.
Brent crude was 0.2% higher at $65.21 a barrel after slumping 2.3%. West Texas Intermediate crude added 0.4% to $62.16 a barrel following a 2.1% tumble
Asia Stocks
Japan’s Nikkei 225 index rose 0.78%
Australia’s S&P ASX 200 edged up 0.15%
Hong Kong’s Hang Seng index ended flat
China’s CSI300 eased 1.01%
The MSCI Asia Pacific index climbed 0.48%.
Stock of the day
Shares of Chinese online video company Kuaishou Technology surged 6% after it had secured the rights to broadcast 2020 Tokyo Summer Olympics and 2022 Beijing Winter Olympics, according to reports in Chinese media.
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