Asian Markets Boosted By China, US Data But Inflation Weighs

Asia’s markets endured a mixed Monday with worries over inflation counter-balanced by strong economic numbers coming out of China and the US.

Wall Street’s three main indexes clocked up new records last week after figures showed more than half a million new US jobs were created last month, with hiring rebounding as new Covid infections fall across the country.

But optimism continues to be held back by worries about inflation, which has surged this year owing to a pick-up in demand, a spike in energy prices and supply chain snarls – forcing central banks around the world to start pulling back their massive pandemic-era support measures.

Also on AF: Alibaba Among Top Six China Stocks Worth $1tn Facing US Delisting

Tokyo, Hong Kong, Sydney, Seoul and Wellington all fell but there were gains in Shanghai, Singapore, Taipei, Manila, Mumbai, Bangkok and Jakarta.

The benchmark Nikkei 225 index closed down 0.35% or 104.52 points at 29,507.05 while the broader Topix index slipped 0.30% or 6.20 points to close at 2,035.22.

The Hang Seng Index gave up 0.43%, or 106.74 points, to 24,763.77. The Shanghai Composite Index rose 0.20%, or 7.06 points, to 3,498.63, while the Shenzhen Composite Index on China’s second exchange added 0.48%, or 11.56 points, to 2,417.97.

Fuelling those inflation worries is Joe Biden’s $1.2 trillion infrastructure bill that finally passed through Congress on Friday, giving the president a much-needed boost in his plan to push through vast spending measures to support the economy.

However, another proposal to stump up another $1.9 trillion for social and environmental programmes continues to languish.

Communist Party Summit

The US jobs report was followed on Sunday by China revealing exports had soared by a better-than-expected 27.1% in October as factories kept goods flowing out despite power outages in recent months caused by emission reduction targets, the surging price of coal and supply problems.

“A lot of the improvements in the numbers have been as a direct consequence of the disruptions to global supply chains as retailers bring forward their pre-Christmas order spend in order to ensure delivery in time for the Thanksgiving, Black Friday, and Christmas periods,” CMC Markets analyst Michael Hewson said.

Traders are keeping an eye on Beijing as the Communist Party holds a pivotal Plenum meeting this week that is likely to see leader Xi Jinping shore up his grip on power as he looks to tighten the government’s control of the economy.

Xi’s “common prosperity” drive to redistribute wealth has seen authorities clamp down on a range of industries – particularly tech firms – which has rattled markets in recent months.

Covid Pill Success

Companies focused on tourism surged after Pfizer said on Friday that a clinical trial of its pill to treat Covid-19 had shown it was 89% effective, adding that it was a huge step towards emerging from the pandemic. Pfizer’s is the second anti-Covid pill after that of Merck.

News on the treatment ramped up hopes that more countries would be able to reopen to foreign travellers soon, sending airlines soaring.

China Airlines jumped more than 7% in Taipei and Shanghai-listed Air China rocketed more than 10%, while Japan Airlines and Hong Kong’s Cathay Pacific rose around 5%.

Macau-based casinos also enjoyed strong buying with Sands China up 7.7%, with MGM China 4.5% higher and Galaxy Entertainment piling on 5%.

Oil extended Friday’s rally after OPEC and other major producers refused to heed Biden’s calls last week to ramp up output to meet a surge in demand, while US officials are considering releasing some of the country’s strategic supplies to temper petrol prices.

MARKETS

Tokyo > Nikkei 225: DOWN 0.4% at 29,507.05 (close)

Hong Kong > Hang Seng Index: DOWN 0.4% at 24,763.77 (close)

Shanghai > Composite: UP 0.2% at 3,498.63 (close)

New York > Dow: UP 0.8% at 36,400.90 (close)