Hong Kong: Asian stock markets rose on Monday, as the sell-off last week gave investors a breather. The decline in U.S. Treasury yields provided some much-needed stability for the market, and Joe Biden’s stimulus through the House of Representatives provided it. Certainly encouraging.
However, observers warn that fears that the global economic recovery will intensify inflation and force interest rate hikes earlier than previously thought, still plague the trading floor, which eliminates the key pillar of the surge in world markets in the past year.
In order to calm the market, several central banks including Japan, South Korea and the European Union sought to reiterate their commitments over the weekend to maintain their ultra-loose monetary policy until the required time. Australia took the lead in expanding the scale of asset purchases to keep the government’s rate of return low.
The huge losses last week provided an opportunity for bargain-hunting buyers on Monday, causing the Asian and Tokyo stock markets to rise more than 2%, while the Hong Kong and Sydney stock markets rose more than 1%. Shanghai, Singapore, Jakarta and Manila also achieved healthy growth. Seoul and Taipei are closed for holidays.
However, fears about a spike in inflation continue to linger, and while the imminent passage of Biden’s vast rescue package is expected to bring crucial relief to the economy and struggling Americans, many traders see it as likely to add to the upward surge in prices.
Analysts said reassurances from the Federal Reserve were not easing those concerns.
“The market is testing the Fed and global central banks as to how serious they are here,” Al Lord, at Lexerd Capital Management, told Bloomberg TV. “There are growth expectations and growing inflation concerns, and that’s playing out in the markets.”