Asian equities appeared to be on track for a calm start Wednesday as traders assessed the impact of rising inflation on the economic recovery and anticipated earnings releases. Treasury yields on longer maturities decreased.
Australian equities fell, but Japan’s futures nudged higher. US futures declined after a decline in the S&P 500 and Nasdaq 100, as investors waited to see if the profit forecast might boost mood. Apple Inc. fell on a possible reduction in iPhone 13 production plans for 2021 owing to processor shortages, refocusing attention on supply-chain snarls caused by pandemics.
The yield on the US 10-year Treasury note dipped below 1.60 percent once again, boosted by strong demand at an auction, as the yield curve flattened. The currency remained quite stable. Markets are anticipating the release of the US consumer price index, which is likely to indicate that inflation remained elevated. Crude oil’s rise has stopped amid a worldwide energy crisis.
Concerns about contagion among indebted developers are growing in China. Sinic Holdings Group Co. is the latest real estate company to issue a warning about impending default. Hong Kong’s stock exchange postponed morning trade as the financial centre was battered by high winds and rain.
The onslaught of corporate earnings announcements coming soon will give insight into whether firms anticipate price pressures to squeeze profit margins. Investor worries are being exacerbated by a backdrop of weakening economic growth and rising inflation, just as important central banks prepare to reduce assistance.
“Earnings season will provide us with an excellent indication of where we’re heading with some of these supply concerns,” Alicia Levine, head of equities and capital market advising at BNY Mellon Wealth Management, told Bloomberg TV. “The two areas that concern us are industrials and retail, as these are the sectors where firms cannot simply pass on price increases.”
Meanwhile, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said the inflation surge is continuing longer than authorities anticipated, and so it is inappropriate to refer to the increase as temporary. Vice Chair Richard Clarida stated that the prerequisites for beginning the reduction of the Federal Reserve’s bond-buying programme had been “all but satisfied.”
The International Monetary Fund warned of the potential of sharp falls in global market and housing prices when global central banks remove their assistance during the epidemic.
Published by Zack Baharum