HONG KONG, Oct 14, 2021 (bss/AFP) - Asian markets mostly rose Thursday as
investors maintained optimism in the global recovery outlook but prepared for
the end of an era of cheap cash with inflation continuing to surge on the
back of supply chain problems and improving demand.
After a year and a half of ultra-loose monetary policies from the world's
central banks, which helped spur a rebound from the pandemic collapse and
send equities flying, concerns about consistently high price rises is forcing
officials to tighten their belts.
Several have already started -- including South Korea and New Zealand,
with Singapore joining in on Thursday -- but all eyes are on the Federal
Reserve, with minutes from its most recent meeting showing it plans to move
either next month or December.
A higher-than-expected reading on US consumer inflation pushed the case
for a November start to tapering its massive bond-buying programme, but the
main question on traders' lips is now when it will begin to hike interest
rates.
"Wednesday's still-elevated consumer price index marks about six months'
worth of hot inflation data -- suggesting that inflation is not as transitory
as many investors previously expected," Nancy Davis, of Quadratic Capital
Management, said.
"The overall inflation story is being driven by supply-chain disruptions
and a swift rise in prices, due to the labour shortage."
On Thursday, China said factory-gate inflation had in September hit its
highest level in a quarter of a century owing to a spike in commodity costs
and rocketing demand as economies reopen.
And with China a crucial exporter to the world, there are concerns the
rises will transfer to other economies.
Meanwhile, some observers have warned of a period of stagflation in which
costs soar but economic growth remains torpid.
Still, investors remain upbeat in Asia after a broadly positive lead from
Wall Street.
Tokyo, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta all rose,
while Shanghai flitted between positive and negative territory. Singapore
dipped following the surprise policy tightening by the city's central bank.
JP Morgan Asset Management's Virginia Martin Heriz said the outlook for
now "still favours equities in the medium term although less so than before".
"This is not stagflation that we are talking about because we are still
growing well above trend," despite signs of a slowdown in the United States
and Europe, she said.
Support was also provided by a healthy start to the earnings season, with
JP Morgan Chase beating forecasts, while Delta Air Lines saw a profitable
third quarter, though it did warn about the impact of fuel prices in the next
quarter.