HONG KONG, Aug 2 — Most markets rose in Asia and Europe today but investor optimism over the global recovery was kept in check by worries over the spread of the Delta coronavirus variant as well as China’s regulatory crackdown.
Signs that US lawmakers were edging towards agreement on President Joe Biden’s US$1 trillion (RM4.2 trillion) infrastructure bill were unable to provide much of a boost, while eyes were on the release of US jobs data at the end of the week as firms struggle to fill positions despite high unemployment.
In the latest sign of an upbeat global outlook, figures last week showed the US economy had returned to its pre-pandemic level — though at a slower pace than expected — while the eurozone expanded at a much better rate than forecast.
However, observers said the rally that world markets have enjoyed for much of the past year was sputtering as investors grow increasingly concerned about spiking inflation that many have warned could force central banks to taper their ultra-loose monetary policies.
Added to that are the slow Covid-19 vaccination programmes in some countries and the rapid spread of the Delta variant that has led to the reimposition of lockdowns and other containment measures.
Among those suffering a spike in cases is China, which managed to bring the disease largely under control but some cities are being forced to introduce new control measures.
Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei, Mumbai, Jakarta, and Manila rose but Singapore and Bangkok fell.
London, Paris, and Frankfurt all rallied in the morning.
“Shares remain at risk of a short-term correction or volatility as coronavirus cases rise globally, the inflation scare continues and as we come into seasonally weaker months,” said Shane Oliver at AMP Capital.
“But surging company profits in the US and lower bond yields are providing support.”
Nervous traders are keeping tabs on China after authorities last week embarked on a crackdown on the country’s private tuition firms as well as the tech and property sectors.
The moves raised concern that other industries could be next, despite officials and state media trying to calm markets in the face of a rout.
On Friday, tech firms were told by authorities to conduct “deep self-examination” over issues including data security and user rights as they tighten the leash on big corporations citing national security and antitrust concerns.
Major names including Alibaba, Tencent, ByteDance, and Pinduoduo were among more than 20 firms summoned to the meeting with a department of the Ministry of Industry and Information Technology.
Tencent fell 0.8 per cent in Hong Kong, though Alibaba rose more than one per cent.
US infrastructure hopes
Still, CICC strategists led by Hanfeng Wang wrote in a note: “Last week’s selloff may be overdone from a technical, near-term perspective.
“Parts of the market are ripe for entry.”
Traders are also watching developments in Washington, where the Senate looks to be on course to pass Biden’s infrastructure bill, which will provide an extra jolt to the world’s top economy, adding to the president’s US$1.9 trillion stimulus earlier in the year.
Lawmakers finalised the bipartisan legislation on Sunday after a special weekend session, and Senate Majority Leader Chuck Schumer said: “I believe the Senate can process relevant amendments and pass this bill in a matter of days.”
The bill includes huge spending on roads and bridges, the electric grid, transit, broadband and drinking water.
Biden is also aiming to pass an ambitious US$3.5-trillion budget package that includes once-in-a-generation spending on health care, education, social welfare and climate action.
In Australia, Afterpay shares surged nearly 19 per cent after US digital payments platform Square Inc., led by Twitter founder Jack Dorsey, said it would buy the Sydney-listed buy-now, pay-later company for US$29 billion.
Key figures around 0810 GMT
Tokyo — Nikkei 225: UP 1.8 per cent at 27,781.02 (close)
Hong Kong — Hang Seng Index: UP 1.1 per cent at 26,235.80 (close)
Shanghai — Composite: UP 2.0 per cent at 3,464.29 (close)
London — FTSE 100: UP 1.0 per cent at 7,099.31
Dollar/yen: UP at 109.67 yen from 109.66 yen at 2100 GMT on Friday
Pound/dollar: UP at US$1.3919 from US$1.3908
Euro/dollar: UP at US$1.1884 from US$1.1876
Euro/pound: UP at 85.38 pence from 85.34 pence
West Texas Intermediate: DOWN 1.0 per cent at US$73.18 per barrel
Brent North Sea crude: DOWN 1.1 per cent at US$74.60 per barrel
New York — Dow: DOWN 0.4 per cent at 34,935.47 (close)
Bloomberg News contributed to this story — AFP