24 Nov 2021, 11:38

Asian markets fall again on inflation fear as oil prices extend gains

   HONG KONG, Nov 24, 2021 (BSS/AFP) - Asian markets fell Wednesday as
investors extended a run of weakness, with inflation worries and expectations
of tighter central bank monetary policy the centre of attention.

   Oil rose further the day after racking up big gains in reaction to news
that the United States and other countries would release less from their
stockpiles than expected, dealing a blow to hopes of tempering a price surge
that has been key to the spike in inflation.

   The announcement from Washington, which President Joe Biden said was in
conjunction with China, India, Japan, South Korea and Britain had been
flagged well in advance, which analysts said had been part of the reason for
a dip in the crude market in recent weeks.

   Brent surged more than three percent and WTI more than two percent Tuesday
and the buying carried on in Asian trade, with concern now building that OPEC
and other major producers will rethink their plan to slowly reopen the taps.

   "The release, widely expected, is the proverbial drop in a bucket... and
might just lead OPEC+ producers to scale back a bit on what they were
planning to pump," said National Australia Bank's Ray Attrill.

   The rise in oil prices added to concerns that inflation -- already at
multi-year highs -- will continue to rise, putting further pressure on banks
to scale back the easy money policies put in place at the start of the
pandemic and crucial to an 18-month market rally.

   The New Zealand central bank on Wednesday lifted its rates for a second
successive month.

   But all eyes are on the Federal Reserve, which some observers have said
could taper its bond-buying programme quicker than first flagged and hike
interest rates next year.

   "For quite a while now that extra liquidity hasn't been going into the
economy, it has been going more into the markets," Matt Maley, of Miller
Tabak + Co, told Bloomberg Television.

   "The Fed is going to start pulling back on that."

   Minutes from the Fed's November policy meeting will be pored over when
they are released later in the day for an idea about officials' thinking.
Economic growth and jobless claims will also be unveiled along with a closely
followed reading on consumer sentiment. Investors are also keeping a wary eye
on developments in Europe, where several countries have introduced strict
containment measures to fight a resurgence of Covid, with Austria returning
to a partial lockdown and some fearing Germany, the continent's biggest
economy, will follow suit.

   On currency markets the Turkish lira remained wedged close to all-time
lows against the dollar after Recep Tayyip Erdogan dug in on his decision to
pressure the central bank last Thursday to cut interest rates, despite
soaring inflation.

   The president is notorious for his unorthodox belief that high interest
rates cause inflation instead of helping tamp it down.

   - Key figures around 0230 GMT -

   Tokyo - Nikkei 225: DOWN 1.1 percent at 29,436.73 (break)

   Hong Kong - Hang Seng Index: DOWN 0.2 percent at 24,605.19

   Shanghai - Composite: DOWN 0.1 percent at 3,584.99

   West Texas Intermediate: UP 0.5 percent at $78.89 per barrel

   Brent North Sea crude: UP 0.4 percent at $82.60 per barrel

   Dollar/yen: UP at 115.13 yen from 115.11 yen at 2230 GMT

   Pound/dollar: DOWN at $1.3378 from $1.3381

   Euro/dollar: DOWN at $1.1236 from $1.1251

   Euro/pound: DOWN at 83.99 pence from 84.03 pence

   New York - Dow: UP 0.5 percent at 35,813.80 (close)

   London - FTSE 100: UP 0.1 percent at 7,266.69 (close)

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