Asian markets mixed amid rate-hike fears

HONG KONG – Asian markets were mixed today as fears that the global recovery will fire inflation continued to niggle investor sentiment as they faced up to the fact that interest rates will not be kept at record lows forever.

The rollout of vaccines, falling infection rates and the prospect of another mammoth US stimulus have sent equity markets to all-time or multi-year highs in recent weeks, with focus firmly on the long-term outlook.

The rally has been underpinned by vast financial support from central banks around the world as well as huge government spending.

But while there is light at the end of the tunnel and people look forward to the easing of social restrictions and a return to some level of normality, the recovery has its downsides.

Focus has turned from the optimistic view of an economy back on track to the expected ramp-up in prices that will likely force central bankers to tighten ultra-loose monetary policies, including hiking interest rates. 

US Treasury yields have rallied to their highest level in around a year as inflation expectations surge.

Several observers have warned a steep, but necessary, correction is possibly on the way.

However, despite growing worries about higher rates, US Federal Reserve officials continue to pledge they will not budge on monetary policy until they are confident the economy is strong enough and employment is back where they want it.

All three main indexes on Wall Street ended in the red, and Asia followed suit, though early heavy selling was tempered later in the day by traders buying the dip.

Tokyo, Sydney, Singapore, Wellington, Taipei, Mumbai and Bangkok were all in the red. But Hong Kong, Shanghai, Seoul, Kuala Lumpur, Jakarta and Manila all saw gains.

London, Paris and Frankfurt rose at the open.

Oil prices extended yesterday’s losses as some companies began slowly restarting operations in Texas, which has seen its refineries hammered by a severe cold snap, while analysts said the inclement weather was likely to dampen demand as people stayed home.

Profit-takers were also taking an opportunity to cash in after both contracts rallied to 13-month highs, they added.

Bitcoin retreated to US$51,591 (RM208,453), having peaked at a record US$52,631 (RM212,656) on Wednesday. – AFP, February 19, 2021