Asia’s Stocks Remain Stable; Oil Prices Rise Due to Scarcity

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Asian equities were volatile on Monday as investors evaluated the ramifications of rising energy prices and Chinese uncertainties. The value of the dollar fell.

MSCI Inc.’s Asian market index has pared advances. Hong Kong fell from its highs, while gains in Japan and Australia were also pared. Shanghai shares fell as commodities stocks fell amid concerns that power cuts are harming industry. Futures in the United States rose. The S&P 500 nudged higher on Friday, recording its first weekly increase in three weeks.

Commodities such as iron ore and commodity-linked currencies such as the Australian dollar increased in value. West Texas Intermediate rose beyond $75 per barrel, while Brent reached its highest level since October 2018 on signals that the petroleum market is tightening due to a global energy shortage. After hawkish statements from the Federal Reserve and the Bank of England last week, ten-year Treasury rates broke over the top of a range that had been held since mid-July, reaching 1.4 percent.

While global markets posted their first weekly gain in three weeks as traders shrugged aside concerns about a Federal Reserve withdrawal in stimulus and China Evergrande Group contagion risks, challenges persist. Investors are focusing more on dangers emanating from China, where an energy crisis is looming and uncertainty around Evergrande lingers. Higher bond yields are also having an impact on equity values.

“We appear to have moved past the Fed tapering concerns,” said Steve Brice, chief investment officer at Standard Chartered Wealth Management. “Clearly, what is going on in the Chinese economy is gaining a lot more attention throughout the world. We will undoubtedly witness a slowdown in the economy as we enter the new year. The question now is how far this will go and what impact it will have on global growth.”

In the midst of Evergrande developments, China’s housing authority has increased control of the distressed developer’s bank accounts to ensure funds are used to build home projects rather than being transferred to pay creditors. Meanwhile, the developer’s electric-car division will not proceed with a projected yuan-denominated share issuance.

The euro remained steady after the German election failed to yield a clear winner, stoking investor concerns about a protracted decision on Europe’s largest economy’s leadership. The Social Democrats’ Olaf Scholz edged ahead of Chancellor Angela Merkel’s conservatives.

Meanwhile, in the United States, House Speaker Nancy Pelosi has promised that a $550 billion infrastructure measure will be passed this week.

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