Asian markets mixed at opening after last week’s gains
HONG KONG – Asian stocks were mixed Monday as traders took a breather after last week’s rally, with concerns about Federal Reserve monetary policy easing as sentiment is driven by the bright outlook for the global economy.
The bipartisan agreement between US lawmakers Thursday on a huge infrastructure deal provided an extra boost to already upbeat investors, who have also been calmed by Federal Reserve pledges to maintain record-low interest rates and vast bond-buying for as long as the recovery needs.
Even a sharp spike in a closely watched gauge of consumer spending for May was taken in stride on trading floors, with much of the surge being attributed to rallying energy costs.
After another record close on Wall Street, Asia struggled to maintain momentum on Monday.
Shanghai, Singapore and Taipei rose but there were minor losses in Tokyo, Seoul, Wellington and Manila, while Sydney was flat.
Hong Kong was closed in the morning owing to heavy storms in the city.
Observers warned that while the general mood was positive, investors remained on edge as inflation continues to be a worry.
The Fed “are far away from tapering, they are far away from increasing rates, but at some point, if the markets sees the Fed being too far behind the curve you will start to see some adjustment on the long end of the curve”, Charles-Henry Monchau, at FlowBank SA, told Bloomberg TV.
“We might not have seen the peak in bond yields. I would not be surprised to see some adjustments in the coming months. That might be an excuse for the market to take a bit of profit.”
Oil prices slip
Traders will also be keeping a close eye on Washington after Joe Biden, Democrats and Republicans came together for a rare agreement on the near $1 trillion roads and bridges plan, with the president acknowledging there was no guarantee the package would get through Congress.
The White House on Saturday stepped back from a call to link it to a wider tax-and-spending bill — including priorities like climate change mitigation, child care, schools and social services — that is opposed by Republicans.
The announcement fanned fears he had threatened to veto the new agreement.
Still, National Australia Bank’s Ray Attrill said: “One of the catalysts for US equities achieving new record highs last week was the news of a handshake deal between the president and a bipartisan group of senators, but some Republican senators now ‘smell a rat’ in so far as voting for the infrastructure bill could be akin to also voting for the American Families Plan.”
He added that “developments here promise to be one source of market volatility in the week ahead”.
Investors will be keeping an eye on the release this week of key manufacturing data from around the world for a better grip on the state of the economic recovery, while crucial US jobs figures are also due.
Oil prices were slightly lower, having hit multi-year highs last week on demand optimism, while traders are awaiting the monthly meeting of OPEC and other top producers Thursday, which is expected to see them lift output to ease fears over falling supplies.
Key figures at 0320 GMT
Tokyo – Nikkei 225: DOWN 0.3 percent at 28,984.93
Hong Kong – Hang Seng Index: Closed in morning
Shanghai – Composite: UP 0.1 percent at 3,610.40
Euro/dollar: DOWN at $1.19324 from $1.1938 at 2045 GMT on Friday
Pound/dollar: DOWN at $1.3881 from $1.3885
Euro/pound: UP at 85.90 pence from 85.99 pence
Dollar/yen: DOWN at 110.68 yen from 110.79 yen
West Texas Intermediate: DOWN 0.1 percent at $74.01 per barrel
Brent North Sea crude: DOWN 0.1 percent at $76.13 per barrel
New York – Dow: UP 0.7 percent at 34,433.84 (close)
London – FTSE 100: UP 0.4 percent at 7,136.07 (close)
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