Asian Shares on Edge amid Inflation Fears

Asian shares

Worries about soaring power prices fuelling inflation were causing Asian shares to become edgy on Wednesday. These concerns weighed on sentiment and expectations that the United States would taper its emergency bond buying programme were heightened.  Moreover, these have kept the dollar at a one-year high. 

In most markets, stock movements were muted. Chinese blue chips were unchanged, Australia squeezed out a 0.06% gain, and Japan’s Nikkei lost 0.2%.  In Hong Kong, the stock market was closed in the morning due to a typhoon.

In early trading, the MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.1%.  It had steadied after an over 1% drop a day earlier, its worst daily performance in three weeks.

Furthermore, investors were waiting for a raft of data releases due on Wednesday. These include Chinese trade results, U.S. consumer price inflation report, and minutes of the U.S. Federal Reserve’s September policy meeting.

Also holding back investors from placing large bets is the looming start of company earnings season.  

Stefan Hofer, chief investment strategist for LGT in Asia Pacific said this week, inflation is overriding pretty much everything else. Because that pushes Fed expectations one way or the other and that’s just so dominant, he said. 

Hofer said, this earnings season is also critical because in the previous one, earnings, especially in the U.S. were very strong. That’s partly because of the base effect. The third quarter may be a little more standard, he added.

The U.S. central bank is inching closer to starting to taper its pandemic relief massive bond purchase programme. This decision has been complicated by growing fears that soaring energy costs will stoke inflation. In addition, the rising energy costs are feared to curtail the economic recovery.

However, three U.S. Federal Reserve policymakers on Tuesday said that the U.S. economy has healed enough for the Fed to begin to withdraw its crisis-era support.

As a result, shares dipped on Wall Street overnight, with the Dow Jones Industrial Average falling 0.34%, the S&P 500 losing 0.24%, and the Nasdaq Composite dropping 0.14%. 

Alibaba Founder Jack Ma Reappears in Hong Kong 

Meanwhile, Chinese billionaire Jack Ma is currently in Hong Kong and has met business associates in recent days, sources said.  The Alibaba Group founder has been largely out of public view since a regulatory clampdown started on his business empire late last year.

Ma has been keeping a low profile since delivering a speech in October 2020 in Shanghai, where he criticized China’s financial regulators. That eventually led to the shelving of Ant Group’s mega IPO after a chain of events.

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