Asian Stocks Maintain Stability; Treasury Yields Fall

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Asian stocks opened flat as US equities erased the majority of their gains as a rally in technology sectors fizzled. Treasuries increased in value, while the dollar maintained its advance.

Japan remained relatively stable, as investors saw the ruling party’s new leader, who is poised to become the country’s next prime minister, as sustaining stability. Australia increased in value, but South Korea decreased. The price of US futures increased. The Nasdaq 100 fell for the third consecutive day after advancing roughly 1% earlier in the day. Buyers of dips aided in the S&P 500’s ascent.

The dollar rose to its highest level since November as investors sought safe haven assets. The deadline for the United States government to continue operating and avert a default is looming amid Washington’s bickering. Treasury yields fell somewhat but stayed near their highest level since June. Jerome Powell, chairman of the Federal Reserve, and his peers in Japan, Europe, and the United Kingdom expressed cautious optimism that supply-chain disruptions boosting inflation rates globally would ultimately prove temporary.

In China, investors continue to scrutinise the China Evergrande Group’s predicament. Wednesday marked the ninth day in a row that the central bank has pumped cash into the financial sector to maintain sufficient liquidity ahead of a week-long holiday.

Investors are anxious about global growth heading into the fourth quarter, owing to inflationary pressures, an impending oil crisis, supply chain bottlenecks, and regulatory threats originating from China. According to a Citigroup Inc. client study, a majority of investors fear chronically rising inflation, with a 20% drop in stocks regarded as more likely than a 20% rebound.

“Growth has obviously hit an airpocket here with concerns about Covid, the drama in Washington right now, and the Chinese property sector, which has thrown global markets into a tailspin,” Christopher Smart, Barings’ chief global strategist, said on Bloomberg Television. “Having said that, the global economy’s overall direction is fairly similar to what it was early this year.”

Published by Zack Baharum

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