25 Oct 2021, 12:26

Asian markets swing as traders eye China outbreak, inflation

 HONG KONG, Oct 25, 2021 (BSS/AFP) - Asian markets were mixed Monday
following last week's gains with investors keeping a worried eye on a fresh
Covid outbreak in China that could drag on the already stuttering economy.

   Long-running worries about inflation continued to cast a shadow over
trading floors, though a healthy batch of earnings have tempered those
concerns in the past couple of weeks.

   Reporting by tech titans including Amazon, Apple, Samsung and Microsoft
are on the agenda this week, and will be closely followed for an idea about
what impact supply chain snarls and rising prices is having on their bottom

   Their forward guidance will also be of interest as they contemplate
tighter central bank monetary policies and a possible hike in interest rates
next year. Tech firms are usually more susceptible to higher borrowing costs.

   News that troubled China Evergrande had paid interest due on a bond before
Saturday's deadline provided a much-needed boost to confidence though it
remains to be seen whether it can meet obligations on other notes due before
the end of the year. Hong Kong and Shanghai fluctuated through the early
session, with traders keeping tabs on the latest Delta variant outbreak in
mainland China, which comes just over three months before the country hosts
the Winter Olympics.

   The latest spike has forced authorities to reimpose strict containment
measures, but there are fears of a wider lockdown which would weigh on
economic growth. Recent outbreaks this year played a role in the below-par
expansion seen in the third quarter.

   There were gains in Sydney, Seoul and Jakarta but Tokyo, Singapore, Taipei
and Manila fell.

   Traders are preparing for the Federal Reserve to join several other
central banks around the world in winding down the massive financial support
put in place at the outset of the pandemic.

   Boss Jerome Powell said last week that the bank's vast bond-buying should
now be tapered, with expectations he will begin the pullback as early as next
month, though he was not ready to hike borrowing costs yet.

   "The risks are clearly now to longer and more persistent bottlenecks, and
thus to higher inflation," he said Friday.

   "I would say our policy is well-positioned to manage a range of plausible
outcomes," he said. "I do think it's time to taper and I don't think it's
time to raise rates."

   Oil prices pressed higher, with Brent at a three-year high above $86,
while WTI was within sight of $85 for the first time since October 2014.

   The latest rise comes after Saudi Arabia said OPEC and other major
producers would be cautious in lifting output despite surging demand, warning
that the pandemic still posed a threat to the outlook.

   The Turkish lira tumbled more than one percent against the dollar after
President Recep Tayyip Erdogan called for the expulsion of ambassadors from
10 countries, including Germany and the United States, who had appealed for
the release of a jailed civil society leader.

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