25 Nov 2021, 10:46

Most Asian markets drop as data points to faster Fed taper

  HONG KONG, Nov 25, 2021 (BSS/AFP) - Equity markets in Asia mostly fell
Thursday as a batch of strong economic data spurred expectations that the
Federal Reserve will withdraw its vast financial support and lift interest
rates earlier than thought.

  A drop in jobless claims to a five-decade low, along with a surge in
consumer income and spending, reinforced optimism that the world's biggest
economy is well on the recovery track but added to pressure on the central
bank to prevent it from overheating.

  The readings came as minutes from the Fed's November policy meeting showed
officials were moving towards tapering their vast bond-buying programme --
known as quantitative easing -- at a faster pace as they try to tame
rocketing prices.

  While officials agreed to lower the amount of bonds it bought each month
from the start of November, the minutes said that "some participants
preferred a somewhat faster pace of reductions that would result in an
earlier conclusion to net purchases".

  They added that the policy board would be prepared to "raise the target
range for the federal funds rate sooner than participants currently
anticipated if inflation continued to run higher than levels consistent with
the Committee's objectives".

  Meanwhile, San Francisco Fed President Mary Daly -- usually seen as a
policy dove -- is also coming around to the idea of a speedier withdrawal of
stimulus. She also said she was "leaning towards" a lift in borrowing costs,
adding it "wouldn't surprise me at all if it's one or two by the latter part
of next year".

  The surge in inflation around the world has led several central banks to
tighten the policies put in place at the start of the pandemic and which have
been a key driver of the global recovery and market rally to record or multi-
year highs over the past year and a half.

  The S&P 500 and Nasdaq closed Wednesday with healthy gains ahead of the
Thanksgiving break.

  But the Dow edged slightly lower, and Asia largely followed suit.

  Hong Kong, Shanghai, Sydney, Singapore and Manila were all in the red.
Seoul was also weighed by the South Korean central bank's decision to lift
interest rates for a second time.

  Tokyo, however, rose thanks to a rally in the dollar against the yen that
helps exporters, while Wellington, Taipei and Jakarta also edged up.

  "These minutes were hawkish," Priya Misra, of TD Securities, said on
Bloomberg Television. "The market has moved the timing of the first rate hike
now to June of 2022 which implies this earlier end to QE is already priced
in. The market is going to struggle until we get more data."

  Still, while markets are stuttering for now, some commentators remain
upbeat about the direction going into next year.

  "When looking forward to 2022 the market will see a true reopening from the
pandemic after the last post-holiday surge, the end of the logistics
bottlenecks, and further earnings growth," said analyst Louis Navellier.

  "Now is not the time to move to the sidelines. Get ready for a green

  - Key figures around 0230 GMT -

  Tokyo - Nikkei 225: UP 0.7 percent at 29,500.57 (break)

  Hong Kong - Hang Seng Index: DOWN 0.3 percent at 24,620.94

  Shanghai - Composite: DOWN 0.3 percent at 3,583.06

  Dollar/yen: DOWN at 115.34 yen from 115.41 yen at 2210 GMT

  Euro/dollar: UP at $1.1211 from $1.1203

  Euro/pound: UP at 84.05 pence from 84.02 pence

  Pound/dollar: UP at $1.3342 from $1.3330

  West Texas Intermediate: DOWN 0.1 percent at $78.35 per barrel

  Brent North Sea crude: UP 0.1 percent at $82.30 per barrel

  New York - Dow: FLAT at 35,804.38 (close)

  London - FTSE 100: UP 0.3 percent at 7,286.32 (close)

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