Asian markets were mixed on Friday as investors struggled to maintain early momentum, with recovery optimism and vaccine hope playing against worries over a spike in new virus infections.
Traders are now looking forward to much-anticipated US 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 virus 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, the United States and parts of Europe were pressing ahead with their reopenings despite a surge in new cases, with vaccines appearing to help keep deaths and hospitalisations down.
Johnson & Johnson became the latest pharma giant to say its drug was effective against Delta and offered durable protection against infection more broadly. Confidence in the jabs and a string of healthy economic readings out of various countries is helping push equity markets higher, and on Thursday the S&P 500 hit a record for the sixth day in a row.
And the general consensus is the rally still has some way to go, albeit with the odd bump in the road.
The latest figures showed US jobless applications fell again last week to a pandemic-era low, while manufacturing activity continued to improve.
Meanwhile, the International Monetary Fund added to the positive mood, forecasting the US economy to expand seven % this year, its highest since 1984, while it also upped its outlook for next year.
“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,” Mark Haefele of UBS Global Wealth Management said.
After Wall Street’s rally, Asia enjoyed broad gains in the morning but that tailed off in the afternoon.
Tokyo, Sydney, Singapore, Wellington, Manila, Mumbai and Jakarta were all up, while Seoul and Taipei were marginally lower.
Hong Kong and Shanghai tanked, however, following a recent run-up in the days leading into Thursday’s Chinese Communist Party centenary celebrations, when authorities looked to provide support to markets.
“There were some funds betting on a safety window and stability in the market leading up to the centennial, and now that the event has passed, logically they would retreat without that perceived layer of safety,” said Hua Tong, at Shenzhen Zhengyuan Investment Co.
All attention is now on the US non-farm payrolls data on Friday, with the Fed paying close attention as it considers its next step on monetary policy. The blockbuster recovery this year — and likely continuation of it 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 not to upset markets.
On oil markets, both contracts dipped slightly following Thursday’s rally that was fuelled by Opec and other major producers delaying until Friday a decision on whether to boost output to meet surging demand.
A panel had earlier recommended they pump an extra 400,000 barrels a day, less than forecast, despite fears that supplies are tightening quickly.
“If Opec cannot agree a deal, it could mean there is no agreement to gradually raise output, leaving production at current levels and forcing prices higher in what’s already seen as a very tight market,” said Markets.com analyst Neil Wilson.
In Tokyo, the Nikkei 225 closed up 0.3% to 28,783.28 points; Hong Kong — Hang Seng Index ended down 1.8% to 28,310.42 points and Shanghai — Composite closed down 2.0% to 3,518.76 points yesterday.
More than 5 million barrels of oil from the US Strategic Petroleum Reserve were exported to Asia and Europe last...