HONG KONG, Sept 28, 2021 (BSS/AFP) - Most Asian markets slipped Tuesday
with investors contemplating the prospect of rising US borrowing costs as
inflation spikes, while US lawmakers' struggle to raise the debt ceiling is
also agitating nerves on trading floors.
Fears over the possible collapse of troubled Chinese developer Evergrande
have abated for now, however, though developments on the crisis are being
closely followed.
With the US economy back on track -- and several Federal Reserve officials
saying their goals of high inflation and tackling unemployment are close to
being met -- the US central bank is expected to begin tapering its ultra-
loose monetary policy within months.
The policy committee essentially signalled such a move at its meeting last
week, while a closely watched guide to its interest rate plans suggested a
rate hike could even come before the end of next year.
"Central bankers have set out how they want to 'normalize' monetary policy
for some time. That process could start soon," Chris Iggo, of AXA Investment
Managers, said.
"The realisation of this has the potential to provoke some volatility in
rates and equities."
The Dow on Wall Street edged up but the S&P and Nasdaq fell into the red,
with tech firms more susceptible to higher interest rates.
And the selling filtered through to Asia, where Tokyo, Sydney, Seoul,
Singapore, Wellington, Taipei and Manila followed suit.
However, Hong Kong piled on more than one percent, having taken a battering
in recent weeks from China's crackdown on a range of industries --
particularly tech firms and Macau-based casinos -- and the Evergrande crisis.
Shanghai eked out a gain.
Initial fears that the collapse of the embattled firm could spill into the
global economy has eased but there are still fears that if the issue is not
handled properly the Chinese property sector, which accounts for a huge part
of the economy, could take a massive hit.
The People's Bank of China on Monday said it would ensure a "healthy
property market" and protect buyers' rights, as it looks to temper anger
among investors about Evergrande failing to complete their properties,
despite taking their money.
The central bank's comments come after a tightening of rules around the
real estate sector by Beijing strangled firms' ability to invest and
construct buildings, a major reason for Evergrande's woes.
"There may be fine-tuning of policies, even though a systemic relaxation of
property curbs is unlikely," Zhong Linnan, of GF Securities, said in a
report.
Adding to the sense of unease among investors is the drawn-out debt limit
saga in Washington, where Republicans have blocked a Democrat move to raise
the US borrowing limit, meaning the government will likely run out of cash at
the end of the week.
But more worryingly, the country could default on its debt obligations next
month, which most observers say would spark a massive financial crisis, with
Republicans saying they refuse to pay for Democrats' spending plans.
Several top officials including Treasury Secretary Janet Yellen and Fed
chief Jerome Powell have urged politicians to step back from the brink and
lift the limit.
The brewing crisis comes as Democrats fight to pass President Joe Biden's
multi-trillion-dollar infrastructure and social spending bills, with party
infighting fuelling concerns that the president's agenda could end up dead in
the water.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.3 percent at 30,139.65 (break)
Hong Kong - Hang Seng Index: UP 1.1 percent at 24,482.79
Shanghai - Composite: UP 0.2 percent at 3,588.24
Dollar/yen: UP at 111.12 yen from 110.01 yen at 2050 GMT
Euro/dollar: DOWN at $1.1689 from $1.1700
Pound/dollar: DOWN at $1.3695 from $1.3704
Euro/pound: DOWN at 85.33 pence from 85.35 pence
West Texas Intermediate: UP 0.4 percent at $75.78 per barrel
Brent North Sea crude: UP 0.3 percent at $79.80 per barrel
New York - Dow: UP 0.2 percent at 34,869.37 (close) London - FTSE 100: UP
0.2 percent at 7,063.40 (close)
-- Bloomberg News contributed to this story –
