Asia markets swing as rate hike fears offset reflation trade

Asia markets swing as rate hike fears offset reflation trade


Hong Kong: Asian markets were volatile on Tuesday as traders tried to reconcile growing optimism about the global recovery and worried that the expected surge in economic activity would exacerbate inflation and force central banks to raise interest rates earlier.

Although there may be a sharp rebound following the introduction of the vaccine, the slowing of the infection, the easing of the blockade and the preparation of another round of vaccine growth in the United States, the gains in global stock markets in the past few weeks have begun to weaken in recent weeks. Large-scale stimulation.

After EU leaders pledged to double vaccine deliveries to 300 million doses between April and June, the European index experienced a much-needed sharp rise due to Frankfurt’s record close due to its immunization program. The pace is too slow.

But Wall Street was a mixed bag, with the Dow also hitting a new all-time high but the S&P 500 in the red and Nasdaq shedding more than two percent as tech firms such as Apple continue to suffer, having rocketed last year as they benefited from people being stuck at home.

“The major indexes can’t roar higher unless the love for big-tech returns,” said OANDA’s Edward Moya.

The divergence in the Dow and Nasdaq comes down to traders shifting into cyclical stocks that benefit more in times of economic booms such as airlines and construction firms, while financials were also rising along with interest rate expectations.

“There’s definitely a lot of volatility in the market right now and many of the sectors that underperformed last year are rallying — this is part of a rotation,” said Valerie Grant, at AllianceBernstein.

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