Asian markets extended a global rally on Friday on optimism for corporate earnings after a strong start to the reporting season, while traders cheered better-than-expected data indicating the US recovery remains on track, despite inflation concerns and the imminent end to cheap cash.
Central banks around the world are preparing to start — or in some cases have started — winding back the vast financial support put in place at the beginning of the COVID-19 pandemic, which has helped economies rebound and pushed equities to record or multiyear highs.
Soaring prices, supply chain snarls and a brewing energy crisis caused by the reopening from lockdowns have put increasing pressure on finance chiefs to act sooner than they had expected to prevent inflation from getting out of control. That has put a brake on a market rally that had lasted for a year and a half.
However, traders have refound some of their mojo this week as strong earnings from banking giants fuel hopes for a standout round of reports.
The S&P 500 on Wall Street had its best day since March, while the Dow Jones Industrial Average and NASDAQ also saw big gains.
Asia followed suit, with Taipei rising more than 2 percent and Tokyo adding 1.8 percent.
The TAIEX rose 2.4 percent to 16,781.19 points, gaining 0.9 percent for the week.
Tokyo’s benchmark Nikkei 225 Index rose 1.8 percent on Friday, surging 3.6 percent weekly, while the TOPIX gained 1.9 percent to finish the week 3.2 percent higher.
The Shanghai Composite Index added 0.4 percent on Friday, but slipped 0.6 percent for the week.
Sydney’s S&P/ASX 200 gained 0.7 percent on Friday, ending the week up 0.6 percent.
Singapore’s Straits Times Index on Friday rose 0.3 percent, bringing its weekly gain to 1.9 percent.
The Hang Seng Index in Hong Kong jumped 1.5 percent, having reopened after two days off, taking its weekly gain to 2 percent.
Bangkok and Wellington dipped.
Investors are awaiting the US Federal Reserve’s next move as it plots an exit from its vast bond-buying monetary easing program, with next month or December seen as the beginning, while bets on an early next year interest rate hike are also building.
“We’re likely going to continue to see this elevated inflation and probably well into 2022,” Wealth Enhancement Group’s Nicole Webb said on Bloomberg Television.
Additional reporting by staff writer
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