Asia Markets Swing As Reopening Optimism Battles Inflation Fear

Asian markets fluctuated on Tuesday, increasing optimism that the deployment of vaccines could bring the global economy back on track, biting concerns that the recovery would drive inflation and lead to higher interest rates.

Observers predict economic activity will surge from the middle of the year as the blockade eases, as the government accelerates the pace of vaccination drives and reduces infection and mortality in most parts of the world. ..

In addition to that, there is Joe Biden’s huge growth promotion spending program. This could be passed by Congress next month, in addition to the Federal Reserve’s promise to keep monetary policy as loose as necessary.

The trillions of dollars worth of monumental government and central bank support was a major driver of the global stock surge from the bottom almost a year ago when the coronavirus was widespread throughout the globe.

But while the mood is getting better, investors are focusing on the effects of reflation. Prices go up when people return to stores and restaurants or start taking vacations.

Expectations of a surge in inflation have raised US Treasury 10-year yields to their highest in a year, which surprised investors fearing that interest rates would rise.

Technology companies that have benefited from being forced to stay home have suffered the worst blows, and companies that could succeed as the economy resumes have been coveted to buy. I am enjoying it.

“Investors, along with energy and other inflation beneficiaries, have all their stocks in Covid’s recovery as an expensive technology name (sold) to provide a source of funding for cheaper travel-related markers. We’re quickly rediscovering that it’s not created equally, “says Stephen Innes, Axi Strategist.

The playoffs between recovery and inflation concerns have stopped the global market recovery in recent weeks, after some hit record or record highs for the first time in years.

The Dow rose, but the tech-rich Nasdaq fell more than 2% on Monday, and the S & P 500 was in the red.

And Asian investors have carefully trampled. Hong Kong, Shanghai, Sydney, Singapore and Jakarta all rose, while Seoul, Wellington, Taipei and Manila fell. Tokyo was closed due to a holiday.

AXA Investment Managers Chris Iggo said a key catalyst for raising stock prices could “decline as the market approaches the next phase of recovery.” “I wouldn’t be surprised if market returns become more volatile in the coming months.”

Traders are eagerly awaiting Federal Reserve Board of Governance Jerome Powell’s parliamentary testimony from Tuesday, looking for thoughts on the bank’s thoughts on rising yields and their impact on policy, especially interest rates. ..

However, OANDA’s Edward Moya said Powell is likely to reaffirm his commitment to seeing jobs recover and inflation continue to rise.

Jerome Powell’s Parliamentary testimony is closely tracked on the idea of the Federal Reserve’s view of rising Treasury yields
POOL / JIM LO SCALZO

“The course of interest rates hasn’t changed this year, and some economists see interest rates as rising in January next year,” he said.

“Financial conditions remain tight and wage pressure remains absent, which should prevent inflation concerns from getting out of control.

“Economic data is improving, but remains inconsistent, and that’s all Powell needs to maintain his ultra-tolerant stance.”

Oil prices continued to rise, and as the world emerged from the blockade, optimistically in response to demand, it recorded a nearly 4% rise and then accumulated more than 1% a day.

Hang Seng Index: up 1.2% at 30,674.98

Shanghai-Comprehensive: 3,654.19 up 0.3%

Tokyo-Nikkei 225: Closed due to holidays

Pound / Dollar: Rise from $ 1.4064 to $ 1.4079 at 2145 GMT

Euro / dollar: rising from $ 1.2161 to $ 1.2176

Euro / Pound: Rise from 86.44 pence to 86.47 pence

Dollar / yen: Fall of 104.97 yen from 105.07 yen

West Texas Intermediate: $ 62.60 / barrel up 1.5%

Brent North Sea Crude: $ 66.33 / Barrel Up 1.7%

New York-Dow: 0.1% up at 31,521.69 (closing price)

London-FTSE 100: down 0.2% at 6,612.24 (closing price)