Asian Stocks Down, Inflationary Pressures Continue to Bite

This post was originally published on this site – Asia Pacific stocks were mostly down on Thursday morning, over concerns that the economic recovery from COVID-19 will be hit as increased inflation forces central banks to tighten their monetary policies.

Japan’s Nikkei 225 fell 0.88% by 10:25 PM ET (2:25 AM GMT), with the Bank of Japan handing down its latest policy decision later in the day.

The European Central Bank will also hand down its policy decision, and the U.S. will also release data, including the third-quarter GDP, later in the day.

South Korea’s KOSPI inched down 0.04%, with Samsung Electronics (OTC:SSNLF) Co. Ltd. (KS:005930) third-quarter profit exceeding estimates.

In Australia, the ASX 200 was down 0.46% and Hong Kong’s Hang Seng Index was down 0.43%.

China’s Shanghai Composite tumbled 1.03% and the Shenzhen Component edged down 0.14%.

Ten-year and 30-year U.S. Treasuries sustained their respective rallies. However, sovereign-yield curves have continued to flatten this week, increasing growth concerns added to signs of growth concerns as inflationary pressures push central banks toward asst tapering. In Asia Pacific, Australia’s monetary authority decided against defending the bond-yield target, causing the April 2024 security to slide.

Commodities including aluminum, iron ore, and crude oil, dropped and in China, officials plan to cap a key coal price. China Evergrande Group’s next coupon payment deadline on Friday is also fast approaching.

Global shares are currently at all-time highs, with better-than-expected corporate earnings proving a boost. However, this rally’s sustainability is dependent on investor confidence that policymakers can curb inflation while sustaining the economic recovery from COVID-19.

There seems to be “less confidence that the U.S. Federal Reserve will be able to thread the needle and neither end up behind the curve with its taper timeline/gradual hikes nor ahead of the curve if it reacts too quickly,” Credit Suisse (SIX:CSGN) head of rates trading strategy Jonathan Cohn said in a note.

Rising numbers of COVID-19 cases in countries, including an “unusual surge” in Singapore, also continue to be of concern to investors.

Finance and health ministers from the Group of 20 will meet on Friday, ahead of the leaders’ summit that will take place over the weekend.

In cryptocurrencies, bitcoin moved even further k from the peak of almost $67,000 reached during the previous week, remaining below the $60,000 mark.