Asian markets enjoy much-needed rally as Fed's big day arrives

Most Asian markets drop on renewed Covid, inflation concerns

By

Hong Kong: Asian markets mostly fell on Monday, fearing that new containment measures will be taken to deal with the surge in new coronavirus cases in Europe, which intensified more and more speculation that the central bank will have to tighten monetary policy faster to curb Inflation has soared.

As major consumer countries including the United States are considering releasing some of their reserves to control prices, oil has expanded its decline, which is a key reason for the surge in inflation this year.

Although the Nasdaq Index closed above a new record of 16,000 for the first time, after Austria stated that it would re-impose the lockdown and start mandatory vaccination from February to combat worrying growth, the S&P 500, Dow Jones and Europe The market provides a negative lead with new infections.

Other countries such as Germany, Slovakia, the Czech Republic and Belgium are also taking measures.

“This of course is not just an Austrian story, Covid infections are rising at an alarming rate around Europe with other EU governments also introducing restrictions with the risk that they may also need to follow Austria’s drastic measures,” said National Australia Bank’s Rodrigo Catril.

The announcements added to the downbeat mood on trading floors with investors expecting central banks to continue winding back the ultra-loose monetary policies put in place at the start of the pandemic and which have been crucial to the global recovery.

Top Federal Reserve officials have indicated they would like to see the bank bring its vast bond-buying programme — known as quantitative easing — to an end quicker than earlier flagged, in order to fight inflation at a three-decade high.

“What we are likely to see this week is more Fed members socialising that idea of a more rapid QE taper,” Jason Schenker, at Prestige Economics, told Bloomberg Television.

“If that idea gets out there and is repeatedly underscored, that will increase the probability that the tapering that’s announced in December will be quicker than the pace that was announced early in November.”

In early trading, Tokyo, Hong Kong, Sydney, Wellington, Taipei, Manila and Jakarta all fell, but Seoul and Singapore rose.

The Shanghai stock market also rose, and analysts speculated that despite the soaring prices in China, the People’s Bank of China may introduce some easing measures to start the growth of the world’s second largest economy.

In the oil market, as the United States, China, and Japan weighed plans to use their inventories to help fight inflation, these two major contracts fell again-on Friday due to new Covid concerns.

The discussion took place after WTI crude oil hit a seven-year high of more than $80 last month due to rising demand and limited supply.

You may also like