As Recovery Optimism Takes Center Stage, Asian Markets are Mostly Up.


As Recovery Optimism Takes Center Stage, Asian Markets are Mostly Up.

Asian stocks mainly gained on Wednesday, continuing a tumultuous trend in global markets as optimism about the economy and coronavirus vaccinations clashed with fears about the fast-spreading Delta variety and China’s regulatory crackdown.

A forecast-beating corporate earnings season, as well as regular assurances from the US Federal Reserve about its ultra-loose monetary policies, have been unable to calm anxieties that the outlook may not be as bright as previously imagined, with attitude shifting day by day.

Even so, following a record close for the S&P 500 on Wall Street and some bargain-hunting, Wednesday was an up day in the morning.

As a dramatic rise in new infections around the world pushes some governments to reimpose severe containment measures, the emergence of the Delta virus subtype remains a key stumbling block to recovery.

China is the biggest source of concern for markets, since millions of people have been placed under curfew and officials have issued travel restrictions in several locations.

After the disease first arose in Wuhan in late 2019, the government had nearly eradicated domestic cases, but it is now seeing its largest outbreak in months.

“While China’s resolve to manage outbreaks has been amply demonstrated, markets will continue to monitor the outbreak given the Delta variant’s strong transmissibility,” said Tapas Strickland of National Australia Bank.

“Another issue is that China’s local vaccinations are less effective against the Delta variant.”

Because of the looming crisis in China, Nomura has lowered its economic growth forecasts for the third quarter and the year.

“The government’s extreme measures are likely to result in the most stringent travel bans and lockdowns in China since the spring of 2020,” said Lu Ting, Nomura’s China chief economist, who added that recent catastrophic floods influenced the decision.

Meanwhile, there is concern that the stringent new rules may reduce oil demand in the world’s second largest economy, putting downward pressure on prices.

Despite the fact that the Infectious Diseases Society of America warned the variety might lift the threshold for herd immunity to 90 percent, from 70 percent, analysts were optimistic that, while Delta was a concern, it was unlikely to have as much of an influence on growth as it did last year.

“We believe the Delta variant will not derail the rebound; it will only delay it,” Laila Pence of Pence Wealth Management told Bloomberg TV.

“The Federal Reserve will live with it. Brief News from Washington Newsday.


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