Asian markets plummet as a result of rising inflation and fears of a virus outbreak.
Asian markets fell Monday after Wall Street’s huge losses, as concerns about the global economy were fueled by inflation fears and the spread of the Delta virus type, while oil prices fell as major producers agreed to raise supply.
The worst hit was Hong Kong, which was warned by the US about the “increasing hazards” of doing business there as China tightens its hold, raising concerns about the city’s future as a financial center.
With vaccines being sent out over the world and some governments loosening restrictions, equities had a good first half of the year, with many hitting new highs or setting new records as speculators banked on a significant rebound from last year’s pandemic-induced crash.
However, the terrifying development of the highly transmissible Delta form has thrown a kink in the works, prompting leaders in a number of nations – notably those with poor inoculation programs – to reinstate lockdowns and other containment measures.
Even in countries where the majority of individuals have been injected and reopenings are still occurring, like as England, there is growing concern about an increase in new cases.
This has sparked concerns that the anticipated recovery will be less than anticipated.
Meanwhile, rising inflation has reignited concern that the Federal Reserve and other central banks would be compelled to scale back their ultra-easy monetary policies and raise interest rates sooner than predicted.
Last Thursday, Treasury Secretary Janet Yellen warned that price increases would continue to be substantial for the next few months but would finally slow.
“Markets are… grappling with a surge of inflation pressure that hasn’t been seen in a long time,” JP Morgan Asset Management’s Michael Hood said.
“Uncertainty about whether it will be temporary or permanent, and a Federal Reserve that is viewing all of this through the lens of an untested and rather vague new framework that they haven’t been able to explain very clearly about,” he added.
“Finally, there’s the Delta version, which is forcing investors to re-focus on the virus at a time when most had been content to leave that concern behind,” he wrote in a note.
“Needless to say, all of this is taking place at a time when valuations in equities, bonds, and credit are all quite high.”
Following Wall Street’s three main indexes falling into the red last week, Asia followed suit.
Hong Kong lost more than 2% of its value. Brief News from Washington Newsday.