Asian markets struggle as virus, Fed taper talk blur outlook

Asian markets struggle as virus, Fed taper talk blur outlook

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Hong Kong: Asian markets fluctuated on Tuesday as hopes for a global recovery were hit by the rapidly spreading Delta variable, and the Fed is expected to soon begin to withdraw the massive financial support that has helped boost the stock market for more than a year.

While vaccinated, infection rates around the world continue to climb, forcing some governments—especially China and Australia—to implement new lockdowns and other containment measures.

This has led some observers to reassess their growth prospects.

At the same time, however, the US economic recovery seems to be on track. The economy added more than 1.8 million jobs in June and July, and some of the world’s top companies reported healthy gains.

With inflation hitting multi-year highs, the Fed is under pressure to prevent price runaway by curtailing the ultra-loose monetary policy implemented at the beginning of the pandemic, and is expected to raise interest rates by the end of 2022.

On Monday, Atlanta Fed President Raphael Bostic (Raphael Bostic) said that the bank’s goal of controlling unemployment and long-term inflation is nearing completion.

“We are well on the road to substantial progress toward our goal,” he told reporters, calling July’s blockbuster jobs figures “definitely quite encouraging in that regard”.

Analysts said the likelihood that the Fed will taper its vast bond-buying scheme was strong. US inflation figures due Wednesday are being keenly awaited.

“With a tapering announcement becoming more certain at an upcoming meeting, the focus is quickly shifting to the form of tapering to help inform on the likely timing of rates lift-off. A relatively fast taper would thus open up the possibility of a rate hike in (the second half) of 2022.”

After a modest lead on Wall Street, Asia wavered in the morning.

As investors returned from the extended weekend holiday, Tokyo and Singapore both rose, while Wellington also rose.

However, Hong Kong, Shanghai and Sydney fell slightly, while Seoul, Taipei, Manila and Jakarta fell slightly.

Nevertheless, there is still a feeling that although Delta Air Lines is worrying, it will only delay the recovery, and the market outlook is generally optimistic.

Loreen Gilbert of WealthWise Financial told Bloomberg TV: “We are now experiencing a pause in recovery.” “When we figure out what the Fed is going to do, investors should expect some volatility in the market because we figure out the Delta variable. .”

As investors are increasingly worried about the impact of the blockade imposed by Delta Air Lines on demand, the oil market is difficult to recover from another sharp drop on Monday, and the monthly meetings of OPEC and other major oil-producing countries will also be closely watched this week.

“The oil market is still in short supply, but demand risks and possible recovery of Iranian crude oil keep prices high,” said Edward Moya. “In view of the recovery story in the United States, the theme of a stronger dollar has begun to emerge, which may drag crude oil prices in the short term.”

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