Asian markets rallied on Wednesday as investors engaged in bargain hunting even as a surge of coronavirus cases stoked fears about the global economic recovery.
Markets were also awaiting the release of the minutes of the latest Fed meeting, in which the US central bank is expected to offer more clarity on its plans for tapering record stimulus issued to protect the economy during the pandemic.
“To see a successful taper in the next few months, we need to see more of those strong job prints,” said John Luke Tyner, fixed income analyst and portfolio manager at Aptus Capital Advisors. “I don’t see the Fed backing out of support yet. I think we need to see the unemployment rate fall below 5%.”
A fresh lockdown in New Zealand and a curfew imposed in Australia’s second-largest city of Melbourne over a Delta outbreak added to concerns about lockdowns along with travel restrictions in China, the world’s second-largest economy.
A lacklustre US retail sales report also exacerbated worries about the latest Covid-19 wave, bringing Wall Street’s streak of five straight records for the Dow and S&P 500 indices to a stuttering halt.
But Asian markets appeared unmoved, with Tokyo snapping a four-day losing streak to close higher Wednesday.
Hong Kong also closed on a high, with investors seemingly broadly unfazed by new antitrust plans from Beijing designed to rein in China’s burgeoning tech giants – plans that saw Chinese firms listed on Wall Street slide overnight.
In China, markets were well up, recouping losses after disappointing economic data from Beijing earlier in the week. Seoul rose, while Australia was steady.
New Zealand made gains despite fears over fresh virus cases as the country’s Reserve Bank chose to keep interest rates unchanged, opting against a move that would have seen it become the first advanced economy in the Asia Pacific to normalise policy.
“The drivers for the rallies across the region are not clear,” Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, said in a note, suggesting that factors ranging from the NZRB decision to declining virus cases in China could be behind the good mood. “Without looking under the bonnet regionally, much of the buying could also be in more defensive stocks, pushing up the headline indexes,” he added.
Markets in London, Paris and Frankfurt edged higher in opening deals, eyeing the earlier gains in Asia.
Global markets will be keeping a close watch on the latest minutes out of the US Federal Reserve due later in the day, after chief Jerome Powell acknowledged that the pandemic was “still casting a shadow on economic activity”.
Investors will be looking for any signs that the Fed plans to scale down its asset purchases – a sign that the central bank sees the US economy as now healthy enough to ease its aggressive intervention.
Elsewhere, oil prices steadied after a four-day slump prompted by the increasingly grim outlook for global demand as the Delta variant surges.
The “market still appears to be unsure how the outlook is looking amid rising cases of the Delta variant”, Daniel Hynes, senior commodities strategist at Australia & New Zealand Banking Group Ltd, told Bloomberg.
Continued lockdowns could still pile pressure on prices, he added.
London’s FTSE 100 fell 0.1% to 7,170.82
Tokyo’s Nikkei 225 rose 0.6% to 27,591.90
Hong Kong’s Hang Seng Index climbed 0.5% to 25,867.01
Shanghai’s Composite Index advanced 1.11% to 3,485.29
West Texas Intermediate crude rose to $66.84 per barrel
- AFP, Mark McCord
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