• Bumper US job figures boost the mood on trading floors
• Chinese tech firms lead the charge as Hong Kong progresses
Markets in Asia continued to edge upwards on Tuesday as hopes for the long-term global outlook trumped worries about the fast-spreading Delta variant and fears the Federal Reserve will soon begin withdrawing its vast financial support.
While vaccinations are being rolled out, infection rates continue to climb around the world, forcing some governments – particularly China and Australia – to impose fresh lockdowns and other containment measures.
That has led some observers to re-evaluate their growth outlooks. However, at the same time, the US recovery appears to be on track, with the economy adding more than 1.8 million jobs in June and July and some of the world’s top companies reporting healthy earnings.
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With inflation hitting multi-year highs, the Fed is coming under pressure to prevent prices from running away by tapering the ultra-loose monetary policies put in place at the start of the pandemic, with forecasts for an interest rate hike in late 2022.
On Monday, Atlanta Fed President Raphael Bostic said the bank’s goals of taming unemployment and long-term hot inflation were close.
And analysts said the likelihood that the Fed will taper its vast bond-buying scheme was strong and eyes are on US inflation figures due out on Wednesday.
After a tepid lead from Wall Street, most of Asia enjoyed gains. Hong Kong led the pack, as Chinese tech firms – which have been battered in recent weeks by Beijing’s crackdowns – saw some much-needed buying interest, while Shanghai also enjoyed healthy gains.
SINGAPORE RISES
The Hang Seng Index jumped 1.23%, or 322.22 points, to 26,605.62. The Shanghai Composite Index climbed 1.01%, or 35.30 points, to 3,529.93, while the Shenzhen Composite Index on China’s second exchange added 0.85%, or 20.96 points, to 2,483.79.
Tokyo and Singapore were both in the green as they reopened after a three-day weekend, while Sydney, Wellington, Mumbai and Bangkok were also up.
Seoul, Taipei, Manila and Jakarta edged down.
The benchmark Nikkei 225 index ended up 0.24%, or 68.11 points, at 27,888.15, while the broader Topix index gained 0.36%, or 6.94 points, to 1,936.28.
RECOVERY PAUSE
There remains a feeling that while Delta is a worry, it will only delay the recovery and that the outlook for markets is broadly positive.
“What we are experiencing right now is a pause in the recovery,” Loreen Gilbert, of WealthWise Financial, said. “Investors should expect some volatility in the markets as we sort out what the Fed is going to do as we sort out the Delta variant.”
Oil rallied after suffering recent heavy losses fuelled by fears about the impact of Delta-enforced lockdowns on demand, and ahead of the monthly meeting of OPEC and other key producers this week that will also be closely followed.
MARKETS
Tokyo – Nikkei 225: UP 0.2% at 27,888.15 (close)
Hong Kong – Hang Seng Index: UP 1.2% at 26,605.62 (close)
Shanghai – Composite: UP 1.0% at 3,529.93 (close)
New York – Dow: DOWN 0.3% at 35,101.85 (close)
- AFP and Sean O’Meara
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