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  01 Dec 2021, 10:54

Asian markets mostly up, oil rallies as virus and Fed hold attention

 

HONG KONG, Dec 1, 2021 (BSS/AFP) - Asian markets mostly rose Wednesday while
oil prices bounced as traders assess the outlook for the global economy after
top drugs makers offered differing opinions on their vaccines' efficacy
against Omicron and the Federal Reserve took a hawkish pivot on monetary
policy.

  A mild recovery from the previous two days' steep losses was turned on its
head in the region on Tuesday after Moderna head Stephane Bancel told the
Financial Times that existing vaccines might not be as effective against the
new Covid strain owing to its multitude of mutations.

  However, other drugmakers later said it was far too early to make a
judgement, with the boss of BioNTech, which made a shot with Pfizer, said it
was likely people would be protected against severe symptoms.

  The less alarming outlook from the other firms helped settle nerves
slightly while news that Moderna, Pfizer and the backers of Russian vaccine
Sputnik V are already working on an Omicron-specific vaccine was also
providing some solace.

  With medical experts saying the full outlook for Omicron was still being
assessed, analysts said markets would remain volatile.

  "If by this time next week the medical gurus have concluded that existing
vaccines are 'sufficient' and/or the Omicron virulence is milder than the
current Delta variant, the market should bounce strongly," said strategist
Louis Navellier.

  "Conclusions the other way could weigh heavily on the current bullish
outlook for 2022," he added.

  "Such uncertainty will likely push some people to the sidelines who want to
lock in the strong gains they've already booked for 2021."

  Tokyo and Hong Kong, which both went south soon after the Bancel comments
were released, saw much-needed gains in early trade, while Shanghai,
Singapore, Seoul, Wellington, Taipei and Jakarta also rose.

  Sydney, which closed before the interview was published Tuesday, slipped
slightly though losses were pared by data showing Australia's economy shrank
less than feared in the third quarter.

  Crude -- which was pummelled Friday and again Tuesday on fears about
possible new lockdowns and their impact on demand -- also enjoyed some
advances with both main contracts up more than two percent.

  The broadly positive performance across Asia came after Fed boss Jerome
Powell put the central bank on the path to removing its vast financial
support measures at a quicker pace than first flagged and lifting interest
rates next year.

  With prices surging at the fastest pace in three decades, Powell told
lawmakers that "clearly the risk of more persistent inflation has risen".

  Having for the best part of the year insisted inflation was "transitory"
owing to supply chain snarls and high energy costs, he for the first time
omitted the word and said it was "appropriate, in my view, to consider
wrapping up the taper of our asset purchases... perhaps a few months sooner".

  With the bond-buying programme put in place at the start of the pandemic --
and key to the economic recovery -- likely to end sooner, analysts are now
suggesting the bank could lift rates possibly twice by the end of 2022.

  "In all likelihood the Fed will now ramp up their pace of tapering and
possibly complete it by March, which leaves the potential for a rate hike to
finally fend off inflation," said Matt Simpson at StoneX Financial.

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