HONG KONG – Asian markets struggled on Thursday despite another record close in New York, with investors watching the rapidly spreading Delta virus variant, which has forced several governments to reintroduce lockdowns and raised concerns about the pace of economic recovery.
The forthcoming release of US job data is also under consideration, with a forecast jump on private employment that raises hopes of a strong reading that will boost optimism about growth in the world’s top economy.
While inflation is expected to continue to rise over the next few months, concerns that the Federal Reserve will tighten its ultra-loose monetary policy too soon or too quickly are eased, with bank officials saying they will be measured in their tapered .
After fluctuating over the past three days, stocks in Asia were mixed in early trading on Thursday.
Tokyo, Shanghai, Sydney, Seoul and Wellington fell, but Singapore, Taipei, Manila and Jakarta rose.
It came after the S&P 500 got its fifth straight record to end the first half of the year more than 14 percent higher.
U.S. traders cheered data showing private companies added 692,000 jobs in June, a big drop from the month before, but far above expectations. The report adds a recent number of figures showing strong consumer confidence, rising house prices and positive business earnings.
The main event this week comes Friday with the release of government wages, which is not a farm, providing a clearer snapshot of economic progress and may play a role in Fed monetary policy considerations.
Preparation for Fed Taper
With a view to these improved prospects, Dallas Fed Chairman Robert Kaplan said that while he hoped the winding up of its bond buying program would begin “soon”, investors would be more prepared than they were in 2013 when a “taper tantrum” sent tremors through the markets.
“I want it to hit the market, and I think this debate we have in (policy board), some of them in public, is good,” he told Bloomberg TV. “People are aware that these adjustments are coming, the only question is when.”
And Atlanta Fed chief Raphael Bostic said economic growth was “actually fully restored,” but taming unemployment, which is a key goal for the bank, will take some time.
While the global rebound continues to pick up, there is a growing concern that the spread of the Delta variant may hamper it.
The virus sees sharp spikes around the world, with Australia shutting down four major cities and several countries imposing severe restrictions, including South Africa, parts of Asia, South America and Europe.
“What we are seeing at the moment are markets that are aware that they have to reduce the risk – the high probability I really should say – that the Covid-19 virus will be with us in the foreseeable future,” Kyle Rodda, an analyst at IG Markets, said.
Oil prices extended Wednesday’s rally as OPEC and other major producers prepare for their monthly meeting later in the day, where they are expected to lift production when demand rides amid the economic recovery.
Both main contracts sit around perennial highs in the mid-$ 70 range, and some observers predict a break of over $ 80, with even $ 100 being tipped.
Key figures at 0230 GMT
Tokyo – Nikkei 225: DOWN 0.5 percent at 28,640.22 (close)
Shanghai Composite: DOWN 0.4 percent at 3,589.33
Hong Kong – Hang Bed Index: Closed for a holiday
Euro / dollar: DOWN at $ 1.1850 from $ 1.1859 at 2050 GMT
Pound / Dollar: DOWN at $ 1.3814 from $ 1.3832
Euro / pound: UP at 85.78 pence from 85.72 pence
Dollar / yen: DOWN at 111.06 yen from 111.11 yen
West Texas Intermediate: UP 0.4 percent to $ 73.75 per share. Barrel
Brent North Sea crude oil: UP 0.4 percent to $ 74.93 per barrel Barrel
New York – Dow: 0.6 percent at 34,502.51 (close)
London – FTSE 100: DOWN 0.7 Percent at 7,037.47 (Close)
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