Asian markets swing as traders weigh Fed tightening, inflation

Asian markets slip after rally as traders consider higher rates

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Hong Kong: Asian stock markets mostly fell on Friday, retreating from the previous day’s gains, as traders considered the central bank’s plan to end the era of ultra-cheap cash to combat soaring inflation, while also responding to the surge in new crown virus infections, threatening an already fragile economic recovery .

With prices rising at the fastest rate in four decades, the Fed this week put itself on a more hawkish path, by promising to end its massive bond purchase program by March and expressing a possible series of interest rate hikes. To control prices. Run until 2023.

Wednesday’s news triggered a rebound in the US and Asian markets as investors welcomed the end of some of the uncertainties that had been looming over the markets for months and the Fed’s plan to control inflation.

OANDA’s Craig Erlam said that the indicator for a possible rate hike is “close to hawkish expectations, which is welcomed by investors with open arms.”

“It’s not often those two things have been said together since the global financial crisis. In fact, it may be a first. The last time the Fed raised rates, it faced strong criticism from some, most notably President Trump.

“This time, it’s not the possibility of inflation, rather the prospect of it rising out of control that’s prompting the move and clearly, investors fear inflation far more than modest tightening. As they should.”

A Bank of England rate hike on Thursday and the European Central Bank’s plan to taper its own financial support — but extending other help — were met with similar upbeat responses in Europe.

However, Wall Street’s three main indexes retreated Thursday as investors took stock of the new policy, with tech firms — which are more susceptible to higher borrowing costs — taking the brunt of the selling, sending the Nasdaq down more than two percent.

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