In Asia, stock prices began a clear decline on Thursday, in stark contrast to the glory of Western stock markets on Wednesday.
After eight, the overall Asia Dow index was down 0.8 percent, Japan’s Nikkei was down 0.6 percent and Hong Kong’s Hang Seng was down 2 percent. In China, the Shanghai Stock Exchange fell 0.6 percent.
Market sentiment was weighed down by the Chinese government’s intervention in technology companies listed in the United States, such as the newly listed passenger service company Didiin, whose price collapsed about a fifth on Tuesday.
The administration has alleged that the company is illegally using the information it collects from its users.
The fall in prices also affected companies over which the administration has not yet controlled, such as the electric car manufacturer Nioa. Its stock price fell 8.5 percent on Wall Street on Wednesday. Alibaban and Baidun the shares were also clearly declining.
On CNBC HSBC Global Asset Management manager Alexander Davey commented on recent exchange rate dips as buying opportunities. He thinks investors should look “through” the situation and rely on the fundamentals of the companies.
The actions of the Chinese administration have been seen as part of the geopolitical fray between the US and China.
The delta variant worries
The market was also weighed down on Thursday by the rise in coronavirus infections in Asia.
In South Korea in particular, the rate of infection rose this week to the highest of the entire pandemic as the delta variant from India spread around the world.
In Indonesia, too, infections are elevated, and the number of deaths is as well.
The Fed was not intimidated
The market theme was also the June meeting of the US Federal Reserve, the minutes of which were announced on Wednesday. It could have caused even the worst to the market if the Committee’s discussions had given concrete consideration to a timetable for easing the pandemic purchasing program.
Now, however, the Fed’s majority view was that there was a need to be “patient” in tightening policy, rather than going to the concrete side. The Fed still sees the rise in inflation as temporary and will not react to it in the coming months.
On the other hand, the Fed’s Open Market Committee considered it important that it be “well-positioned” to reduce the purchasing program if unforeseen economic development costs so require.
However, the committee was divided on how fast the U.S. economy was moving out of the pandemic to the point where blackmail would become topical. If the pace is surprising, “tapering” may begin earlier than expected.
Currently, according to the Financial Times, the consensus expectation of economists is that the $ 120 billion buying program would begin to be reduced early next year or at the earliest at the end of this year.
Information on austerity plans is expected in either August or September.
Interest rate hikes are not expected to begin until 2023, although in June the market was startled when Fed members had brought forward their expectations of starting rate hikes by a year.
Now the bond market was calm after the announcement of the Fed protocol. The ten-year US bond yield has fallen to 1.31 per cent, after peaking at more than 1.7 per cent in the spring.
In terms of currencies, the euro strengthened slightly to just under $ 1.18, but at the same time the dollar index strengthened by 0.09 percent against the currency basket. In particular, the dollar strengthened against the yen, by 0.3 percent. The dollar has strengthened again to its March levels after weakening markedly from late spring.
The Australian dollar lost 0.3 percent from its previous rise.
The Chinese administration unexpectedly sent a message about easing reserve requirements to support diluted economic growth, and especially for small and medium-sized enterprises. This weighed on interest rates in China and increased demand in the Chinese fixed income market.
The price of oil continued to withdraw from its peak for several years. The price of a barrel of WTI quality was already at $ 75, but on Thursday the quotation was $ 72.
Source: Arvopaperi by www.arvopaperi.fi.
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