As U.S. Stocks Soar, Asian Stocks Are Poised to Follow; the Dollar Falls

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A focus on corporate earnings will help soothe some of the concerns about inflationary pressures in the global economy, as Asian equities are likely to follow the U.S. gain. The dollar’s value dropped on a gauge that tracked the currency.

Japan’s and Hong Kong’s futures prices rose. At the start of trading, Australian stocks were slightly higher while U.S. contracts remained flat. After analysing quarterly earnings reports, traders are trying to figure out how supply-chain delays and increasing commodity costs could affect the S&P 500. The earnings prediction for Johnson & Johnson was lifted, Netflix Inc. members increased, and Procter & Gamble Co. saw raw material and freight costs rise. all at the same time.

10-year Treasury yields rose beyond 1.6%, with the yield curve becoming steeper as a result of this increase. There were betting that other central banks would raise interest rates before the Federal Reserve, which resulted in the dollar losing ground. After spiking, the offshore yuan remained stable.

Bitcoin is on the verge of regaining its April high. The first U.S.-listed Bitcoin ETF began as the second-heaviest traded fund in history, marking a watershed moment for the cryptocurrency industry.

Concerns about slowing GDP, rising energy prices, and the possibility of lessening central bank support have been allayed thanks to the earnings season. Since August, the Cboe Volatility Index has been declining.

“As inflation, labour, supply, and currency threats settle in, this earnings season could be quite crucial for investors,” said New York Life Investments economist and portfolio strategist Lauren Goodwin. “We’ll pay close attention to what companies have to say about the way forward and whether or not greater costs impact their profit margins.”

Governor Christopher Waller said the central bank should begin trimming its bond-buying programme next month, but interest-rate rises are likely “still some ways off,” according to the latest Fed comments. According to him, “if my inflation upside risk materialises, with inflation much above 2 percent well into 2022, then I will prefer liftoff sooner than I now foresee.”

According to Esty Dwek, chief investment officer of FlowBank SA, “I don’t think the Fed will move or hike very forcefully because they have this inflation view, but also because we’ll be in a decreasing GDP situation by the end of next year”.

Beijing’s regulatory restraints and the slump in China’s property market remain the key talking points, as the company’s debt problems continue to plague China Evergrande Group. For the fifth year in a row, China sold a dollar-denominated bond in Hong Kong.

On the other hand, crude oil in New York traded around $83 a barrel, and Brent ended above $85 a barrel for the first time since October of last year Russia has hinted that it will not provide additional natural gas to Europe unless the Nord Stream 2 pipeline is approved.

Published by Zack Baharum

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