Asian markets drop as inflation, recovery return to focus
HONG KONG, Oct 28, 2021 (BSS/AFP) - Fears over rising inflation and
pressure on central banks to tighten monetary policy sent markets lower in
Asian trade Thursday as investors contemplate the end of the era of cheap
cash, while spiking Covid infections act as a reminder that the pandemic is
far from over.
Ongoing worries about China's vast property sector and the future of giant
developer Evergrande were also in view ahead of a payment deadline, while
uncertainty over Joe Biden's social spending plan was also keeping a lid on
However, a string of healthy corporate earnings has provided a crucial
boost to trading floors, helping push markets to multi-year or record highs
this week, while Apple and Amazon are due to report later in the day.
Initial optimism that the global economic recovery would bound well into
next year has petered out in recent months as dealers assess the impact of
soaring inflation, with prices rising at rates not seen for decades in some
countries owing to supply chain snarls and rocketing demand.
That has led several central banks to lift interest rates sooner than they
had hoped or withdraw their easy money policies to prevent inflation from
running out of control.
The Bank of Canada on Wednesday said it would end its vast bond-buying
programme and flagged an interest rate hike earlier in 2022 than previously
The move comes after finance chiefs in South Korea and New Zealand raised
borrowing costs, and as the Bank of England and Reserve Bank of Australia
prepare for lift-off.
Meanwhile, the Federal Reserve is expected to start tapering its vast bond-
buying programme by the end of the year and hike rates in the middle of 2022.
It is hoped the European Central Bank's policy meeting later in the day
will provide clarity on its own plans.
After a broadly negative lead from Wall Street, Asia also dropped, with
Hong Kong, Shanghai, Tokyo, Seoul, Sydney, Singapore, Wellington, Taipei,
Jakarta and Manila all selling off.
In Washington, Biden was battling with Democratic leaders to resolve
disputes over their giant social spending plan, though some lawmakers warned
a deal did not appear to be imminent.
While House Speaker Nancy Pelosi said the spending plan was "closer to
passing", a key centrist senator later dismissed a new tax on billionaires to
help pay for the $1.5-$2 trillion package as a non-starter.
Oil prices fell more than two percent to extend Wednesday's sharp drops
following data showing a big gain in US inventories of crude and petrol. The
figures eased concerns about a supply crunch and surging demand.
News that Iran and the European Union had agreed to restart talks on
Tehran's nuclear programme added to the selling pressure, raising the
prospect of more crude hitting markets if sanctions on the Middle Eastern
country are eased.
Both main contracts have fallen around five percent from their multi-year
highs touched on Monday.
- Key figures around 0230 GMT -
Tokyo - Nikkei 225: DOWN 0.9 percent at 28,825.62 (break)
Hong Kong - Hang Seng Index: DOWN 0.4 percent at 25,540.91
Shanghai - Composite: DOWN 1.1 percent at 3,522.63
Dollar/yen: DOWN at 113.56 from 113.82 yen at 2035 GMT
Pound/dollar: UP at $1.3742 from $1.3738
Euro/dollar: UP at $1.1606 from $1.1602
Euro/pound: UP at 84.46 pence from 84.44 pence
West Texas Intermediate: DOWN 2.1 percent at $80.91 per barrel
Brent North Sea crude: DOWN 2.2 percent at $82.70 per barrel
New York - Dow: DOWN 0.7 percent at 35,490.69 (close)
London - FTSE 100: DOWN 0.3 percent at 7,253.27 (close)