Asian share markets were trying to pick up the pieces on Monday following last week’s thrashing as coronavirus concerns showed little sign of abating, while safe-haven flows benefited the dollar ahead of a key update on US monetary policy.
Asian share markets were trying to pick up the pieces on Monday following last week’s thrashing as coronavirus concerns showed little sign of abating, while safe-haven flows benefited the dollar ahead of a key update on US monetary policy.
A raft of “flash” manufacturing surveys for August out on Monday will offer an early indication of how global growth is faring in the face of the Delta variant, with analysts expecting some slippage and especially in Asia.
More than USD 560 billion was wiped from Hong Kong and mainland China exchanges last week as funds fretted on which sectors regulators might target next.
The rot spread to Japan where the Nikkei shed 3.4 percent last week to its lowest since January. Bargain hunting helped the index bounce 1.2 percent early Monday.
“Following a strong V-shaped recovery, there are many signs of slower growth,” says BofA’s chief investment strategist Michael Hartnett.
“The US yield curve is at a one-year low, emerging markets are negative YTD and both copper and oil are down double digits from recent highs.”
He expects negative returns for stocks and credit in the second half of this year and suggests investors own defensive quality.
The spread of the Delta variant also has the potential to upset the timing of the US Federal Reserve’s tapering plans.
“Our base case is that the FOMC will announce a taper in September if the August non-farm payrolls is strong,” said Joseph Capurso, head of international economics at CBA.
That is in market contrast to the European Central Bank which is under pressure to add more stimulus, giving the dollar a leg up on the euro.
The single currency was trading at USD 1.1697, after losing 0.8 percent last week to touch 10-month lows at USD 1.1662. That in turn helped the dollar index to a 10-month peak at 93.734, and it was last trading firm at 93.507.
It has been more restrained against the Japanese yen at 109.84, which is also benefiting from safe-haven flows.
Global growth jitters took a heavy toll on commodities last week, with base metals, bulk resources and oil all falling.
Oil had suffered its sharpest week of losses in more than nine months as investors anticipated weakened fuel demand worldwide due to a surge in COVID-19 cases.
(Text input from Reuters)
(Edited by : Priyanka Deshpande)
First Published: IST
