Asian markets on Friday were mixed as fears that the global recovery would fire inflation continued to niggle investor sentiment as they faced up to the fact that interest rates would not be kept at record lows forever.
The rollout of vaccines, falling infection rates and the prospect of another mammoth US stimulus have sent equity markets to all-time or multiyear highs in the past few weeks, with focus firmly on the long-term outlook.
The rally has been underpinned by vast financial support from central banks around the world, particularly the US Federal Reserve, as well as huge government spending.
However, while there is light at the end of the tunnel and people look forward to the easing of social restrictions and a return to some level of normality, the recovery has its downsides.
Focus has turned from the optimistic view of an economy back on track to the expected ramp-up in prices that is likely to force central bankers to tighten ultra-loose monetary policies, including hiking interest rates. US Treasury yields have rallied to their highest level in about a year as inflation expectations surge.
“With large-scale stimulus amid recovery from the COVID-19 shock, investor attention has focused on potential impacts from rising rates and inflation,” AxiCorp Financial Services Pty chief global markets strategist Stephen Innes said. “Stocks are at the brink of moving from the sweet zone into the danger zone as Fed rate hikes start nudging towards 2022 and the taper tantrum drum keeps beating in the distance.”
“For now, the Fed has been able to keep the taper genie in the bottle. Still, in a world quick to normalize due to the vaccine with additional fiscal stimulus providing rocket fuel to the inflationary fire, higher rates are on the verge of becoming a consensus view,” he said.
With much of the equity rally fired by expectations that borrowing costs would be kept low for the foreseeable future, markets are beginning to wobble, with unease about frothy valuations adding to the selling pressure. Several observers have warned a steep, but necessary, correction is possibly on the way.
In Taipei on Friday, the TAIEX ended down 83.13 points, or 0.51 percent, at 16,341.38 on turnover of NT$346.820 billion (US$12.24 billion). It was up 3.41 percent for the week.
In Hong Kong, the Hang Seng rose for a third week, ending 0.16 percent firmer at 30,644.73. It increased 1.56 percent from a week earlier
The Shanghai Composite Index rose 0.57 percent to 3,696.17, with a weekly gain of 1.12 percent.
In South Korea, the KOSPI gained 0.68 percent to 3,107.62, rising 0.23 percent for the week.
Japan’s TOPIX dropped 0.67 percent to 1,928.95, and declined 0.25 percent from a week earlier. The Nikkei 225 also lost ground, dropping 0.72 percent to 30,017.92, but posted a weekly gain of 1.69 percent.
Australia’s S&P ASX 200 declined 1.34 percent to 6,793.8, losing 0.19 percent from a week earlier.
Additional reporting by staff writer
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group