Asian markets extend rebound after Wall St brushes off inflation
Published : Thursday, 15 February, 2018 at 10:13 AM Count : 113
Hong Kong stocks were on course to end the Year of the Rooster leading a rally across Asian markets, extending a rebound Thursday from last week’s turmoil, as investors tracked a strong lead from Wall Street.
A key US inflation reading showed prices shot up in January, sending Treasury yields rising and fanning expectations the Federal Reserve will hike interest rates at a sharper pace then expected a few months ago, AFP reports.
However while the news initially sent US equities tumbling, they soon recovered and all three main indexes on Wall Street finished at least one percent higher, with dealers soothed by a surprisingly heavy drop in retail sales that eased inflation fears.
Global markets went into a tailspin last week on rising T-Bill rates and the prospect of higher borrowing costs caused by a resurgent US economy and improving wages.
But this week has seen a recovery, though there remains an element of caution as analysts warn of further turmoil after a stellar 2018 and January that saw several record and multi-year highs hit.
As traders headed into the Chinese New Year peak, Hong Kong was 1.6 percent higher, having climbed around 3.5 percent over the previous two days. However, it still has some ground to make up after last week’s more than nine percent drop.
Tokyo ended the morning 1.3 percent higher, despite a surge in the yen against the dollar, which tends to hurt exporters.
Sydney rose 0.9 percent, Singapore was up 0.8 percent and Wellington added 0.2 percent while Kuala Lumpur and Jakarta were also up.
Shanghai, Seoul, Taipei are closed for the Lunar New Year.
Dollar takes a hit
Stephen Innes, head of Asia-Pacific trading at OANDA, said: “In seemingly absurd fashion, US equity investors ignored the inflationary signals and focused on weaker-than-expected US retail sales report.
“There is an increasing possibility that (incoming Fed boss Jerome) Powell may blink and the Fed will be more hesitant to guide monetary policy given the waning growth narrative.
On currency markets the dollar is taking a hit across the board, with the yen at fresh 15-month highs, while the euro built on Wednesday’s gains that came after figures showed solid German economic growth.