HONG KONG – Asian markets mostly rose today, tracking another New York record, with recovery optimism and vaccine hopes trumping worries about a spike in new Covid-19 infections, while oil prices extended gains after the Organisation of the Petroleum Exporting Countries (Opec) failed to reach a deal on lifting output.
Traders are now looking forward to much-anticipated United States jobs data later in the day, which will provide a fresh snapshot of the world’s biggest economy and possibly give the Federal Reserve further reason to begin tapering its ultra-loose monetary policy.
The rapid spread of the Delta variant has become a cause for concern for several governments, and has forced some, including Australia and South Africa, to reimpose lockdown measures.
However, other countries, such as Britain and the US, and parts of Europe, are pressing ahead with reopenings despite a surge in cases, with vaccines appearing to help keep deaths and hospitalisations down.
Johnson & Johnson became the latest pharma giant to say its drug is effective against Delta and offers durable protection against infection more broadly.
Confidence in the jabs and a string of healthy economic readings from various countries are helping push equity markets higher, and yesterday, the S&P 500 hit a record for the sixth day in a row. And, the general consensus is that the rally still has some way to go, albeit with the odd bump in the road.
The latest figures showed US jobless applications falling again last week to a pandemic-era low, while manufacturing activity continues to improve.
Oil extends gains
Meanwhile, the International Monetary Fund added to the positive mood, forecasting the US economy to expand 7% this year, its highest since 1984, while also upping its outlook for 2022.
“With economic and earnings growth prospects robust, policy accommodative, and valuations still appealing relative to bonds, we believe the current environment is supportive of further equity gains,” said Mark Haefele of UBS Global Wealth Management.
After Wall Street’s rally, Asia enjoyed broad gains.
Tokyo, Sydney, Seoul, Singapore, Taipei, Wellington, Manila and Jakarta were all up, though Hong Kong and Shanghai slipped more than 1% owing to a sell-off in tech shares.
All attention is now on the US non-farm payrolls data, with the Fed paying close attention as it considers its next step on monetary policy.
The blockbuster recovery this year – and its likely continuation into 2022 – has pushed the central bank to bring forward projections for winding down its massive bond-buying programme, with some predicting it will start later this year.
However, while that would mean the beginning of the end of its accommodative programme, analysts expect it to move slowly so as to not upset markets.
On oil markets, both contracts rose in Asia, having rallied yesterday after Opec and other major producers delayed until today a decision on whether to boost output in light of rebounding demand. West Texas Intermediate and Brent are at levels not seen since 2018.
A panel earlier recommended that they pump an extra 400,000 barrels a day, lower than forecast, despite fears that supplies are tightening quickly. Still, officials are unable to reach a deal, and observers said the meeting could end with no increases agreed, putting further upward pressure on prices. – AFP, July 2, 2021
