The resurgence of the virus is a double-edged sword for markets – ensuring central banks will continue their ultra-loose policies but also bringing huge economic uncertainty too
The rally in global stocks extended into Asia on Tuesday with optimism about the upcoming earnings season outweighing worries over the fast-spreading Delta virus variant.
Hopes that the central banks will maintain their ultra-loose monetary policies, or only taper them very gradually, was also providing support to traders as economies look to recover from the ravages of last year’s pandemic-induced collapse.
The release of key data and other events will also be closely tracked this week as markets try to get a handle on the state of the global rebound, with Chinese growth, US inflation and several central bank decisions in view.
Wall Street’s three main indexes chalked up more records as investors prepared for the earnings deluge from top banks including JP Morgan and Goldman Sachs later in the day.
Observers are predicting the period could be the best in more than two decades, though they warn that the readings would have to be blockbuster to build on the latest markets rally, with many traders “buying the rumour and selling the news”.
Hong Kong led the gains in Asia, rising 1.7%, while Tokyo, Shanghai, Seoul, Singapore, Mumbai, Wellington, Bangkok and Taipei also enjoyed gains.
The Hang Seng Index jumped 1.63%, or 448.17 points, to 27,963.41. The benchmark Shanghai Composite Index climbed 0.53%, or 18.69 points, to 3,566.52, while the Shenzhen Composite Index on China’s second exchange added 0.27%, or 6.83 points, to 2,491.97.
The Nikkei 225 rose 0.52%, or 149.22 points, to 28,718.24, while the broader Topix index gained 0.73%, or 14.31 points, to 1,967.64.
However, Sydney gave up early advances to end flat, while Manila and Jakarta also slipped.
Covid-19 continues to cast a shadow across the world’s markets though as new case numbers rise around the world, with the United States and Britain – which are well advanced in their vaccination programmes – also seeing high numbers, though with lower deaths and hospitalisations.
The sharp rise in infections has forced some governments, including in France and Greece, to impose restrictions again to quell the spread, leading to worries about the impact on the economic recovery.
That concern has also weighed on oil prices, which fell on Monday after a two-day gain.
They were rising again on Tuesday, helped by the International Energy Agency saying demand surged last month. However, it also warned that with OPEC and other producers pumping less than needed, the market would likely be volatile until they reached a deal to hike output.
Federal Reserve chief Jerome Powell’s comments to lawmakers on central bank policy will be keenly watched on Thursday for clues about its outlook in light of the fast US recovery and the impact of the Delta variant.
That comes after New York Fed boss John Williams said on Monday that important parts of the economy were not rebounding well enough for policymakers to wind their vast monetary easing measures.
Tokyo – Nikkei 225: UP 0.5 percent at 28,718.24 (close)
Hong Kong – Hang Seng Index: UP 1.6 percent at 27,963.41 (close)
Shanghai – Composite: UP 0.5 percent at 3,566.52 (close)
New York – DOW: UP 0.4 percent at 34,996.18 (close)
- Reporting by AFP